Inventory—Used Certified Cars (Franchise Only)

• ACCOUNT EXPLANATION
• TRANSACTIONS
• COMMENTS

ACCOUNT EXPLANATION

TRANSACTIONS

COMMENTS

• Used CPO cars 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 Liablility 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 the repossession was a new vehicle sale or a used vehilce 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 supoort this account. At month end, used CPO cars should be physically inventoried and thier 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.