647A Reconditioning - Certified Used Cars

647A Reconditioning – Certified Used Cars

Cost of Sales

Used Vehicle Department

Cost of Sales Synopsis

This account is established to record the amount of Reconditioning performed on GM Certified Used Cars in order to prepare each unit for sale.

Debits

Credits

Reconditioning cost of GM Certified Used Cars sold to retail customers

Example 1

Record a Certified Used Car sale in the amount of $16,695. The sales tax is $835 and the Document Handling Fees are $125. The inventory value is $15,195, of which $400 is due to Reconditioning.

Journal: Used Car Sales

Entry:		Debit	Credit
Account 220A	Accounts Receivable – Customer – Vehicles	$17,655
Account 646A	Cost of Sales – Used Car Retail – Certified	$14,795
Account 647A	Reconditioning – Cert. Used Cars	$400
Account 240	Inventory – Used Cars		$15,195
Account 446A	Sales – Used Cars Retail – Certified		$16,695
Account 324A	Sales Taxes Payable – Excise Taxes		$835
Account 910	Document Handling Fees		$125

Comments

At the time of appraisal, an assessment of repairs necessary to recondition the vehicle for sale should be made. After the unit is placed in inventory and recorded in Account 240, Used Cars (Inventory), the Used Vehicle Manager should immediately prepare an Internal Repair Order describing the repair work to be completed. When the repairs are completed, the Internal Sale should be added to the vehicle inventory record and debited to Account 240, Used Cars.

As each Certified Used Car is sold at retail, the total amount of Reconditioning performed is to be debited to this account and credited to Account 240, Used Cars.