715 Policy-Leased Vehicles (Closed End Lease)

725 Policy-Leased Vehicles (Open End Lease)

735 Policy-Leased Vehicles (Rental)

Lease & Rental Activity

Direct Cost

Cost of Sales Synopsis

Accounts 715, 725, and 735, Policy (adjustments) for Closed End Lease, Open End Lease and Rental vehicles, respectively are established to record the cost of performing repairs to Lease and Rental vehicles for which the customer is not charged.

Debits

Credits

  1. The Internal selling price of Labor & Materials for Lease and Rental vehicles

 

 

Example 1

Record the $43 of mechanical repairs to a lease unit not covered by warranty or a maintenance agreement and not chargeable to the lessee.  The labor sale is $43 and the cost of labor is $13.

Journal: Internal Sales

Entry:

 

Debit

Credit

Account 715

Direct Cost – Policy – Leased Vehicles – Close End Lease

$43

 

Account 663

Cost of Sales – Internal Labor - Mechanical

$13

 

Account 247A

Inventory – Work in Process

 

$13

Account 463

Sales – Internal Labor – Mechanical

 

$43

 

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.