469 Shop Supplies

Sales

Fixed Operations

Sales Synopsis

Account 469 is established to record the sale of Shop Supplies on Repair Orders such as cleaning rags, engine de-greaser, spray lubricants, and other consumable supplies.

Debits

Credits

 

  1. The sales of Shop Supplies charged to customers on Repair Orders

 

669 Shop Supplies

Cost of Sales

Fixed Operations

Cost of Sales Synopsis

Account 669 is established to record the cost of Shop Supplies sold in Account 469 above.

Debits

Credits

  1. The estimated cost of Shop Supplies

 

 

Example 1

Record a customer cash sale of $1,326 for mechanical labor and parts.  The part sale is $750.  The customer labor sale is $500.  The sales tax is $38 and the shop supplies are $38.  The parts cost is $500.  The cost of the labor is $125 and the cost of the shop supplies is $28.

Journal: Service Sales - Cash

Entry:

 

Debit

Credit

Account 225

Cash Sales

$1,326

 

Account 661A

Cost of Sales – Customer Labor – Commercial, Fleet & Medium Duty Trucks

$125

 

Account 668

Cost of Sales – Parts Mechanical Repair Orders & Light Duty Trucks – Commercial, Fleet, & Medium Duty Trucks

$500

 

Account 669

Cost of Sales – Shop Supplies

$28

 

Account 242

Inventory – Parts & Accessories

 

$500

Account 242

Inventory – Parts & Accessories

 

$28

Account 247A

Inventory – Work in Process – Mechanical

 

$125

Account 324

Sales Taxes Payable

 

$38

Account 461A

Sales – Customer Labor – Commercial, Fleet, & Medium Duty Trucks

 

$500

Account 468

Sales – Parts Mechanical Repair Orders – Commercial, Fleet, & Medium Duty Trucks

 

$750

Account 469

Sales – Shop Supplies

 

$38

Note:

At the time of purchase, Shop Supplies should be recorded in Account 242, Parts and Accessories (inventory).  As Shop Supplies are sold, Account 669, Shop Supplies (Cost of Sales) is debited and Account 242, Parts and Accessories is credited.

 

It is preferable that these sales be costed individually at actual cost, however, they may be costed on a percentage basis on each R.O.  If a percentage basis is used, an accurate percentage of sales should be developed to apply as cost for each classification of sales.

 

Using a reasonable sample, such as a three-month sales period, all sales in each classification should be costed at actual cost on each repair order and counter sales invoice.  A summary should be prepared of all sales and cost of sales included in this study.  Total sales in each classification should be divided into the corresponding total actual costs.  The resulting percentages should then be applied to the applicable sales classifications at each subsequent month end to determine cost of sales.  This study should be repeated as frequently as necessary.