850 Finance & Insurance Chargebacks

Finance & Insurance Activity

New Vehicle

Cost of Sales Synopsis

Account 850 is established to record Chargebacks from various financial and insurance companies for early termination, by customers, of financing arrangements and insurance coverage.

Debits

Credits

  1. Chargebacks from Finance institutions

  2. Chargebacks from Insurance sales

 

 

Example 1

Record $4,440 of chargebacks for the month from a finance institution of which $2,793 is for the New Vehicle Department and $1,647 is for the Used Vehicle Department.

Journal: General Journal

Entry:

 

Debit

Credit

Account 850

Finance & Insurance Chargebacks – New Vehicle

$2,793

 

Account 851

Finance & Insurance Chargebacks – Used Vehicle

$1,647

 

Account 262

Due from Finance Companies

 

$4,440

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.