490 Tires

Sales

Fixed Operations

Sales Synopsis

Account 490 is established to record the sales of Tires by the Parts and Accessories Department.

Debits

Credits

 

  1. Actual selling price of tires sold to customers other than with new vehicles

  2. Actual selling price (at claim rate) of tires for which Warranty and Transportation Claims are filed

  3. Internal selling price of tires sold to other departments

 

690 Tires

Cost of Sales

Fixed Operations

Cost of Sales Synopsis

Account 690 is established to record the Cost of Sales of Tires sold in Account 490 above.

Debits

Credits

  1. Cost of tires sold

  2. Adjustment to decrease the value of Account 243, Tires (inventory)

 

  1. Adjustment to increase the value of Account 243, Tires (inventory)

 

Example 1

Record a cash sale of $442 for the sale of mechanical labor and tires.  The labor sale is $85.  The tires sale is $340 and the sales tax is $17.  The cost of labor is $25 and the parts cost is $285.

Journal: Service Sales - Cash

Entry:

 

Debit

Credit

Account 225

Cash Sales

$442

 

Account 660A

Cost of Sales – Customer Labor – Cars & Light Duty Trucks

$25

 

Account 690

Cost of Sales – Tires

$285

 

Account 243

Inventory – Tires

 

$285

Account 247A

Inventory – Work in Process – Mechanical

 

$25

Account 324

Sales Taxes Payable

 

$17

Account 460A

Sales – Customer Labor – Cars & Light Duty Trucks

 

$85

Account 490

Sales – Tires

 

$340

Note:

These sales may be costed individually at actual cost.  However, at each month end, inventory adjustments to physical count values should be reflected in the applicable cost of sales accounts.

 

Internal sales of regularly stocked tires should be priced at cost plus 25%, but not to exceed the retail selling price item.

 

If it is determined that there is little or no additional cost involved in handling non-regularly stocked tires, such internal sales may be priced at a rate lower than cost plus 25%, if desired.

 

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.