711 Interest (Closed End Lease)

721 Interest (Open End Lease)

731 Interest (Rental)

Lease & Rental Activity

Direct Cost

Cost of Sales Synopsis

Accounts 711, 721, and 731, Interest for Closed End Lease, Open End Lease, and Rental vehicles, respectively, are established to record the Interest paid or payable for flooring Lease and Rental Vehicles while in service.

Debits

Credits

  1. The amount of interest paid and accrued on notes payable secured by Lease and Rental vehicles

 

 

Example 1

Record the monthly amortization of the prepaid interest in the amount of $91.

Journal: Standard Entries Journal

Entry:

 

Debit

Credit

Account 711

Direct Cost – Interest – Close End Lease

$91

 

Account 312A

Notes Payable – Lease & Rental Units – Prepaid Interest

 

$91

 

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.