October 30, 2016 admin

Inventory-New Cars-Other Franchise

Assets

INVENTORY—NEW CARS—OTHER FRANCHISE ASSET ACCOUNT
1305

ACCOUNT EXPLANATION
Cost of new cars on hand, including labor and material charges for dealer-installed options and accessories. Cost excludes holdback on vehicles purchased from other manufacturers.

New vehicles purchased from these manufacturers should be recorded in inventory at cost, excluding the vehicle holdback.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Purchase of new car on wholesale floor plan VP
    Inventory—New Cars—Other Franchise 1305
    Accounts Receivable—Other 1130
      Notes Payable—New Vehicles & Demonstrators—Other Franchise 2005
             
  Cash received for new car transferred to another dealer at a gain CR
    Cash in Bank—General 1001
      Inventory—New Cars—Other Franchise 1305
      Cost of Sales—All Dealer Transfers (amount of gain) 4640
      (Receiving dealer should charge Account 1305, Inventory—New Cars—Other Franchise, with the purchase cost of the vehicle)    
           
  Costing of new car sold at retail NV  
    Cost of Sales—NonFoMoCo   4340
      Inventory—New Cars—Other Franchise     1305
             
  Claim for model year-end carryover rebate G    
    Accounts Receivable—Carryover Allowance   1130  
      Inventory—New Cars—Other Franchise     1305
             
  Cost of Sales of vehicle sold to finance institutions NV    
    Cost of Sales—NonFoMoCo   4340  
      Inventory—New Cars—Other Franchise     1305
             
  Accessories installed in a new car I    
    Inventory—New Car—Other Franchise   1305  
      Inventory—Parts, Other     1410
      Service Labor Sales—Internal—Other Franchise     5731
      Body Shop Labor Sales—Internal—Other Franchise     5841
             
  New Car leased under a sales-type lease NV    
    Investment in Sales-Type Leases   1630  
      Sale—Non FoMoCo Fleet Cars     3370
      Deferred Income—Sales-Type Leases     1640
    Cost of Sales—Non FoMoCo Fleet Cars   4350  
      Inventory—New Cars—Other Franchise     1305
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 should be deducted from the factory invoice total and charged to Account 1130, Receivables—Other .
  • Prep and conditioning allowance, advertising fund assessment and floor plan assistance should not be deducted from factory invoice total.
  • 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.