October 30, 2016 admin

Cash Sales—Clearing

Assets

CASH SALES—CLEARING ASSET ACCOUNT
1010

ACCOUNT EXPLANATION
A clearing account for cash sales. Ordinarily, there should be no balance in the account.
TRANSACTIONS
  Jrnl. Dr. Cr.
  New car sold to retail customer for cash
    – Record sale NV
      Cash Sales—Clearing 1010
      Sales—New Cars—Retail     3000, etc.
    – Record cash received CR
      Cash in Bank—General 1001
        Cash Sales—Clearing     1010
             
   Parts sold over the counter to retail customer for cash
    – Record sale PS
      Cash Sales—Clearing 1010
        Sales—Parts—Counter Retail     5420
 
    – Record cash received CR
      Cash in Bank—General 1001
        Cash Sales—Clearing   1010
         
  Sale of New Vehicle with an Extended Service Plan Contract NV  
    Cash Sales—Clearing   1010
      Sales and Use Taxes     2150
      Customer Service Contracts     2315
      Sales—New Vehicles     3000, etc.
      Service Contract Income—New     5040
           
  Repairs to a Customer’s Car under the Company Extended Service Plan PS  
    Cash Sales—Clearing (customer’s deductible)   1010
    Ford Receivables—Extended Service Plan   1185  
      Sales—Parts—Service Contracts     5440
      Sales—Labor—Service Contracts     5710
    Cost of Sales—Parts—Service Contracts   6440  
    Cost of Sales—Labor—Service Contracts   6710  
      Inventory Parts, Ford     1400
      Inventory Parts, Other     1410
      Labor—Labor in Process     1440
COMMENTS
  • Since this account should always show a zero balance, no provision is made for it on the financial statement.
  • If a balance does exist in this account at month end, its nature should be determined and appropriate adjustment made before the financial statement is prepared.