311 Notes Payable – Used Vehicles
Liabilities
Notes Payable
Synopsis
Account 311 is established to record the amounts paid or payable to financial institutions for Used Vehicle inventory financed on a short term line of credit. This line of credit is secured by the vehicles themselves and is commonly referred to as the “floorplan”.
Debits |
Credits |
|
|
Example 1
Record a purchase of a used vehicle from auto auction in the amount of $14,795 and the car is added to the used car floorplan. The purchase price includes an auction fee of $295.
Journal: Used Car Purchase
Entry: |
|
Debit |
Credit |
Account 240 |
Inventory – Used Cars |
$14,795 |
|
Account 311 |
Notes Payable – Used Vehicles |
|
$14,795 |
Example 2
Record the monthly curtailment of the above note payable required by the financial institution in the amount of $296.
Journal: Payoff and Cash Disbursements
Entry: |
|
Debit |
Credit |
Account 311 |
Notes Payable – Used Vehicles |
$296 |
|
Account 202 |
Cash in Bank |
|
$296 |
Example 3
Record the payoff of the above vehicle in the amount of $14,499 (after there has been a curtailment).
Journal: Payoff and Cash Disbursements
Entry: |
|
Debit |
Credit |
Account 311 |
Notes Payable – Used Vehicles |
$14,499 |
|
Account 202 |
Cash in Bank |
|
$14,499 |
Comments
A credit balance represents the amount owed to finance institutions on notes secured by used vehicles.