809 Insurance Commissions Earned-Used Vehicles

Finance & Insurance Activity

Used Vehicle

Sales Synopsis

Account 809 is established to record Commissions earned for selling supplemental insurance coverage on Used Vehicles.

Debits

Credits

 

  1. Insurance commissions earned relative to Used vehicle sales including:

a.   Credit Life

b.   Accident & Health

c.   GAP Insurance

 

Example 1

Record an Other Used Car sale in the amount of $17,076 paid partly with a $14,355 finance contract and $4,000 from the trade-in. The finance contract reserve is $853, sales tax is $854, insurance commissions earned from the sale of a GAP insurance policy are $150 and Registration Fees are $125.  The inventory value of the used vehicle sold is $15,876 of which $876 is due to Reconditioning.  The cost of the GAP insurance policy is $150.

Journal: Used Car Sales

Entry:

 

Debit

Credit

Account 205

Contracts in Transit

$14,355

 

Account 262

Due from Finance Companies

$853

 

Account 646B

Cost of Sales – Used Cars Retail – Other

$15,000

 

Account 647B

Reconditioning – Used Cars Other

$876

 

Account 240

Inventory – Used Cars

$4,000

 

Account 446B

Sales – Used Cars Retail – Other

 

$17,076

Account 240

Inventory – Used Cars

 

$15,876

Account 300

Accounts Payable – Trade Creditors

 

$150

Account 324A

Sales Taxes Payable – Excise Taxes

 

$854

Account 808

Finance Income – Used

 

$853

Account 809

Insurance Commissions Earned – Used

 

$150

Account 910

Document Handling Fees

 

$125

Note:

Transactions, which are related, should be recorded in separate sub-accounts.  Sub-accounts serve to keep records organized for future analysis and auditing.  The sub-accounts in these examples are designated by a letter following the account number (suffix).  Please refer to your DSP's instructions for establishing sub-accounts.