October 30, 2016 admin

Cash in Bank—Trust

Assets

CASH IN BANK—TRUST ASSET ACCOUNT
1003

ACCOUNT EXPLANATION
Cash on deposit with the bank representing customer deposits held in trust to be applied on future deliveries of vehicles and other merchandise.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Deposit received from customer on future new car delivery CR
    Cash in Bank—Trust 1003
      Customer Deposits 2300
             
  Delivery of new car sold for cash NV
    Cash in Bank—General 1001
    Customer Deposits   2300  
      Sales—New Cars—Retail 3000,etc.
             
  Transfer to general bank account of deposit applied on delivery of new car CD
    Cash in Bank—General 1001
      Cash in Bank—Trust 1003
COMMENTS
  • Bank reconciliations should be prepared immediately upon receipt of the bank statement and canceled checks each month.
  • The balance in this account at month end should equal the total dealership liability represented by Account 2300, Customer Deposits, less deposits received from customers in the form of used vehicles or other items taken in trade on future deliveries. This may be accomplished as follows:

    Each customer cash deposit received is deposited immediately in the trust bank account. When the vehicle is delivered to the customer, the amount of the deposit is transferred immediately from the trust bank account to the general bank account.