651B Reconditioning – Other Used Trucks

Cost of Sales

Used Vehicle Department

Cost of Sales Synopsis

Account 651B, Reconditioning – Other Used Trucks is established to record the cost of Reconditioning of non-GM Certified Used Trucks.

Debits

Credits

  1. The Reconditioning cost of Other, non-GM Certified, Used Trucks sold to retail customers

 

 

Example 1

Record a Used Truck - Other sale in the amount of $22,283 with a finance contract reserve of $865, sales tax of $1,114 and Document Handling Fees of $180.  The inventory value is $21,083 of which $1,083 is due to Reconditioning.

Journal: Used Car Sales

Entry:

 

Debit

Credit

Account 205

Contracts in Transit

$23,577

 

Account 262

Due from Finance Companies

$865

 

Account 650B

Cost of Sales – Used Trucks Retail – Other

$20,000

 

Account 651B

Reconditioning – Cert. Used Trucks

$1,083

 

Account 450B

Sales – Used Trucks Retail – Other

 

$22,283

Account 241

Inventory – Used Trucks

 

$21,083

Account 324A

Sales Taxes Payable – Excise Taxes

 

$1,114

Account 808

Finance Income – Used

 

$865

Account 910

Document Handling Fees

 

$180

Comments

The Used Vehicle manager is responsible for appraising Used Trucks at the time of acquisition.  The appraisal should include an estimate of necessary Reconditioning work in order to prepare the vehicle for sale.  The Used Vehicle manager should prepare the Internal Repair order to have the Reconditioning performed.  The cost of Reconditioning should be charged to the vehicle by debiting Account 241, Used Trucks (Inventory).  When the vehicle is sold at retail to an end user, the Reconditioning cost is debited to this account.