Inventory—Used Cars (Non Certified) – Ford Online Accounting Manual

Assets

INVENTORY—USED CARS (NON CERTIFIED)	ASSET ACCOUNT
	1350

ACCOUNT EXPLANATION
TRANSACTIONS
COMMENTS

ACCOUNT EXPLANATION

Used Cars Non Certified held for resale valued at the lower of cost or estimated wholesale value. Cost includes reconditioning charges.

TRANSACTIONS

			Jrnl.	Dr.	Cr.

Used car non certified taken in trade on new car sale			NV
	Inventory—Used Cars Non Certified (at estimated wholesale value)			1350
	Finance Contracts—New			1020
		Sales—New Cars			3000, etc.

Reconditioning work performed on used car			I
	Inventory—Used Cars Non Certified			1350
		Sales—Parts to Service—Internal (at internal rate)			5470
		Sales—Parts to Body Shop—Internal (at internal rate)			5530
		Sales—Service Labor—Internal (at internal rate)			5730
		Sales—Body Shop Labor—Internal (at internal rate)			5840

Costing used car sold at retail			UV
	Cost of Sales—Used Cars Non Certified—Retail			4700
	Cost of Sales—Used Cars Non Certified—Reconditioning—Retail			4701
		Inventory—Used Cars Non Certified			1350

Repossessed car (originally sold as a new car) purchased from finance institution			CD
	Inventory—Used Cars Non Certified (at estimated wholesale value)			1350
	Estimated Liability for Repossession Purchase Loss			2600
	or			or
	Repossession Purchase Loss—New (excess of purchase)			6070
		Cash in Bank—General			1001

Purchase of vehicle and return of security deposit			CD
	Inventory—Used Cars Non Certified			1350
		Accounts Receivable—F.M.C.C.—Deferred Gross			1836
		Customer Deposits			2300
		Cash in Bank—General			1001

Write down value of vehicle purchased from F.M.C.C			GJ
	Leased Vehicle Gain or Loss			5300
		Inventory—Used Cars Non Certified			1350

COMMENTS

Used cars Non Certified should be placed in inventory at estimated wholesale value, less estimated reconditioning required to make the vehicle saleable at the estimated wholesale value. When repossessed units are placed in inventory, the excess of purchase price over estimated wholesale value should be charged to Account 2600, Estimated Liability for Repossession Purchase Loss. If Account 2600 is not used, the excess should be charged to Account 6070, Repossession Purchase Loss—New, or Account 6170, Repossession Purchase Loss—Used, depending on whether the sale that led to repossession was a new vehicle sale or a used vehicle sale. Further information regarding the handling of repossession purchase losses is contained in Account 2600.
If at month end, the amount at which a unit is carried in inventory exceeds its current estimated wholesale value, the excess should be credited to this account and charged to Account 4702, Used Cars—Inventory Adjustments.
Subsidiary records should support this account. At month end, used cars should be physically inventoried and their total value reconciled with the balance in this account. An aging schedule of used vehicles on hand should be prepared for management review.
Auction fees incurred on purchase of used cars should be charged to this account.
An inventory numbering system, providing cross-referencing to the new vehicle source where applicable, should be used. See Office Management for details.
Units sold as junkers should be recorded as wholesale sales.
Account No. 1836, Accounts Receivable F.M.C.C.—Deferred Gross, should be combined with Account No. 1830, Other Assets, for financial statement purposes.