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

  1. Reconditioning cost of GM Certified Used Trucks sold to retail customers

 

 

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.