511 Recurring Lease Payment (Closed End Lease)

521 Recurring Lease Payment (Open End Lease)

Lease & Rental Activity

 

Sales Synopsis

Account 511, Recurring Lease Payment (Closed End Lease) and Account 521, Recurring Lease Payment (Open End Lease), are established to record the regular (typically on a monthly basis) Lease Payments received from customers for leased vehicles operated under arrangements for which the dealership is the owner and underwriter of the lease.

Debits

Credits

 

  1. Amount of payments received and accrued from lease customers for vehicles leased directly from the dealership

 

Example 1

Record the accrual of $5,513 customer lease payments on Closed End Leases.  The recurring lease payments are $5,250 and the sales tax is $263.

Journal: Standard Entries Journal

Entry:

 

Debit

Credit

Account 220C

Accounts Receivable – Customers – Closed End Lease

$5,513

 

Account 511

Recurring Lease Payment (Closed End Lease)

 

$5,250

Account 324

Sales Taxes Payable

 

$263

Comments

This account is only for dealerships who operate their own leasing operations.  Professional tax, accounting, and insurance advice should be obtained and strictly observed regarding the proper administration of dealership owned lease vehicles.

Note:

  1. Lease and Rental vehicles are recorded in Account 277, Lease and Rental (inventory).

  2. 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 (suffix).  Please refer to you DSP’s instructions for establishing sub-accounts.