Notes Payable—Installment Sale Balance – Ford Online Accounting Manual

Liabilities and Net Worth

NOTES PAYABLE—INSTALLMENT SALE BALANCE	LIABILITY ACCOUNT
	2050

The deferred percentage of the total notes payable to F.M.C.C. on vehicles floor-planned on an installment sale basis.

			Jrnl.	Dr.	Cr.

Note given to F.M.C.C. for the balance owing (e.g. 10%) on vehicles purchased on an installment sale			CD
	Notes Payable, New Vehicles and Demos			2000
		Cash in Bank—General			1001
		Notes Payable, Installment Sale Balance			2050

Deferred portion is paid to F.M.C.C.			CD
	Notes Payable, Installment Sale Balance			2050
		Cash in Bank—General			1001

Under the Wholesale Installment Sale Program, dealers may pay 90% of the wholesale obligation at the time a unit is sold. The 10% balance is payable on the first day of the second month following the month of sale. This system is useful for dealers who have opportunities to utilize the increased cash flow (a “rolling” 10% of your average floor plan amount) to pay off other liabilities or to increase your new vehicle equity.
In the transaction above, the 10% deferred amount is set up in Notes Payable, Installment Sale Balance, at the time the vehicle is sold. Under the plan, when the deferred 10% payment becomes due, it will appear on your monthly statement form Ford Credit. When the deferred amount is paid, Notes Payable, Installment Sale Balance, is debited and Cash is credited for the same amount.