470 Customer Paint Labor – Cars & Trucks

Sales

Fixed Operations

Sales Synopsis

Account 470 is established to record Body Shop Paint sales paid directly by customers for repairs performed by the Body Shop Department.

Debits

Credits

 

  1. Actual selling price of Body Shop Paint Labor sold to customers

 

670 Customer Paint Labor – Cars & Trucks

Cost of Sales

Fixed Operations

Cost of Sales Synopsis

Account 670 is established to record the Cost of Sales, which is defined as compensation paid to technicians, for customer paid Body Shop Paint Labor.

Debits

Credits

  1. Cost of Body Shop Paint Labor sold to customers

 

 

Example 1

Record a customer cash sale of $3,740 for body shop labor, parts and materials.  The body labor sale is $740 and the paint labor sale is $595.  The parts sale is $1,975.  The paint and body shop materials are $315 and the sales tax is $115.  The cost of the labor is $795 with $350 due to paint labor and $445 for body shop labor.  The parts cost is $1,380.  The cost of body shop materials is $235.

Journal: Service Sales - Cash

Entry:

 

Debit

Credit

Account 225

Cash Sales

$3,740

 

Account 670

Cost of Sales – Customer Paint Labor – Cars & Trucks

$350

 

Account 671

Cost of Sales – Customer Body Labor – Cars & Trucks

$445

 

Account 677

Cost of Sales – Parts - Body Customer Repair Orders – Cars & Trucks

$1,380

 

Account 679

Cost of Sales – Paint & Body Shop Materials

$235

 

Account 242

Inventory – Parts & Accessories

 

$1,380

Account 245

Inventory – Paint & Body Shop Materials

 

$235

Account 247B

Inventory – Work in Process – Body Shop

 

$795

Account 324

Sales Taxes Payable

 

$115

Account 470

Sales – Customer Paint Labor – Cars & Trucks

 

$595

Account 471

Sales – Customer Body Labor – Cars & Trucks

 

$740

Account 477

Sales – Parts – Body Customer Repair Orders – Parts & Trucks

 

$1,975

Account 479

Sales – Paint & Body Shop Materials

 

$315

Note:

It is recommended that whenever practicable labor sales be costed on actual basis because material losses of productive time may be concealed by the inaccuracies inherent in percentage costing methods.  Such inaccuracies can result from failure to update costing percentages when changes occur in the compensation of technicians and in the structural of selling prices of labor, and other reasons.

 

Assure that Repair Order templates, and accounting are set up correctly by the DSP and maintained whenever technicians have payroll changes.  Technician incentives or bonuses should be considered cost of labor sales and debited to A/C 665 and 675 as applicable.  However, holiday, vacation, and sick pay should not be charged to Cost of Labor Sales, but as a non-productive wage expense in A/C 24 - Absentee Compensation.

 

Before closing each month, assure that the balance in A/C 247 - Work in Process, matches the total cost of labor on open (unclosed) R.O.'s, any difference should be adjusted to A/C 665 or 675 - Labor Adjustment.