651A Reconditioning – Certified Used Trucks
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 Trucks in order to prepare each unit for sale.
Debits |
Credits |
|
|
Example 1
Record a Certified Used Truck sale in the amount of $23,386 with a finance contract reserve of $968, sales tax of $1,169 and Document Handling Fees of $180. The inventory value is $21,986 if which $786 is due to Reconditioning.
Journal: Used Car Sales
Entry: |
|
Debit |
Credit |
Account 205 |
Contracts in Transit |
$24,735 |
|
Account 262 |
Due from Finance Companies |
$968 |
|
Account 650A |
Cost of Sales – Used Trucks Retail – Certified |
$21,200 |
|
Account 651A |
Reconditioning – Cert. Used Trucks |
$786 |
|
Account 450A |
Sales – Used Trucks Retail – Certified |
|
$23,386 |
Account 241 |
Inventory – Used Trucks |
|
$21,986 |
Account 324A |
Sales Taxes Payable – Excise Taxes |
|
$1,169 |
Account 808 |
Finance Income – Used |
|
$968 |
Account 910 |
Document Handling Fees |
|
$180 |
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 241, Used Trucks (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 cost of the Internal Sale should be added to the vehicle inventory record and debited to Account 241, Used Trucks.
As each Certified Used Truck is sold at retail, the total amount of Reconditioning performed is to be debited to this account and credited to Account 241, Used Trucks.