October 30, 2016 admin

Inventory—New Cars

Assets

INVENTORY—NEW CARS ASSET ACCOUNT
1300

ACCOUNT EXPLANATION
Cost of new cars on hand, including labor and material charges for dealer-installed options and accessories. Cost excludes holdback, and other manufacture rebates, & cost reduction programs on vehicles purchased from Ford Motor Company.

New vehicles purchased from the company should be recorded in inventory at cost, excluding the vehicle holdback, and other Ford programs.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Purchase of new car on wholesale floor plan VP
    Inventory—New Cars 1300
    Ford Receivable—Vehicle Holdback 1160
    Ford Receivable—Other Ford Programs 1200
      Notes Payable—New Vehicles & Demonstrators 2000
             
  Cash received for new car transferred to another dealer at a gain CR
    Cash in Bank—General 1001
      Inventory—New Cars 1300
      Cost of Sales—All Dealer Transfers (amount of gain) 4640
      (Receiving dealer should charge Account 1300, Inventory—New Cars, with the purchase cost of the vehicle)    
           
  Costing of new car sold at retail NV  
    Cost of Sales—New Cars—Retail   4000, etc.
      Inventory—New Cars     1300
             
  Claim for model year-end carryover rebate G    
    Ford Receivable—Carryover Allowance   1175  
      Inventory—New Cars     1300
             
  Cost of Sales of vehicle sold to F.M.C.C. NV    
    Cost of Sales—New Vehicle   4001, etc.  
      Inventory—New Cars     1300
             
  Accessories installed in a new car I    
    Inventory—New Car   1300  
      Inventory—Parts, Ford     1400
      Inventory—Parts, Other     1410
      Service Labor Sales—Internal     5730
      Body Shop Labor Sales—Internal     5840
             
  New Car leased under a sales-type lease NV    
    Investment in Sales-Type Leases   1630  
      Sale—All Fleet Cars     3350
      Deferred Income—Sales-Type Leases     1640
    Cost of Sales—New Vehicle   4001, etc.  
      Inventory—New Cars     1300
COMMENTS
  • The description and cost of new cars purchased should be entered on a subsidiary vehicle inventory record. At month end, cars should be physically inventoried and their total cost reconciled with the balance in this account.
  • Holdbacks and prep and conditioning allowance should be deducted from the factory invoice total and charged to Account 1160, Ford Receivable—Vehicle Holdback, and Account 1195—Preparation and Conditioning.
  • Dealer advertising fund assessments should not be deducted from the factory invoice.
  • A stock numbering system that will identify units by car line should be adopted. See Office Management for details.
  • Parts and labor used in the installation of options and accessories on new vehicles by the dealership should be charged to this account at internal rates.