854 Repossession Losses-Used

Finance & Insurance Activity

Used Vehicle

Cost of Sales Synopsis

Account 854 is established to record losses due to repossession of Used Vehicles.

Debits

Credits

  1. Excess of the amount due over the appraised wholesale value of repossessed vehicles, whether the vehicles are secured by notes held by the dealership or by notes discounted with finance institutions

  2. Losses on repossessed vehicles sold by finance institutions

  3. Repossession surpluses due customers

 

  1. Deficiency settlements on repossessed vehicles

Example 1

Record the monthly provision of $3,000 for estimated repossession losses from the sale of new and used vehicles.  The repossession losses for new vehicles are $2,000 and $1,000 for used vehicles.

Journal: Standard Entries Journal

Entry:

 

Debit

Credit

Account 853

Repossession Losses – New

$2,000

 

Account 854

Repossession Losses – Used

$1,000

 

Account 332

Other Reserves

 

$3,000

Comments

A debit balance represents repossession losses on previous used vehicle sales.

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.