October 30, 2016 admin

Inventory—Parts—FoMoCo

Assets

INVENTORY—PARTS—FoMoCo ASSET ACCOUNT
1400/1405

ACCOUNT EXPLANATION
Ford parts and accessories on hand valued at the lower of cost or estimated market value, excluding freight.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Parts purchased from Ford Motor Company on open account P
    Inventory—Parts—FoMoCo 1400
    Inventory—Parts—Quick Lane 1405
      Accounts Payable—Trade 2100
             
  Inventory value of parts sold to a wholesale customer PS
    Cost of Sales—Parts—Wholesale 6400
      Inventory—Parts—FoMoCo 1400
Inventory-Parts-Quick Lane 1405
             
  Costing of internal sale of parts on a repair order under used car guarantee I
    Cost of Sales—Internal—Service 6470
    Cost of Sales—Internal—Service-Quick Lane/Quick Lane Tires

6475,6476
    Cost of Sales—Parts—Internal—Body Shop 6530
      Inventory—Parts—FoMoCo 1400
      Inventory—Parts—Quick Lane   1405
           
  Reduction of parts inventory account to physical inventory value G  
    Allowance for Parts Inventory Adjustments   1430
      Inventory—Parts—FoMoCo     1400
      Inventory—Parts—Quick Lane     1405
           
  Costing of parts used to repair units damaged in transit PS  
    Cost of Sales—Parts—Repair Shop   6430
    Cost of Sales—Parts—Repair Shop–Quick Lane/Quick Lane Tires   6435,6436
    Cost of Sales—Parts—Body Shop   6500, 6510
      Inventory—Parts—FoMoCo     1400
      Inventory—Parts—Quick Lane     1405
             
  Repair to customer’s car under the company’s Extended Service Plan PS    
    Cash Sales—Clearing (customer’s deductible)   1010  
    Ford Receivables—Extended Service Plan   1185  
      Sales Parts—Service Contracts     5440
      Sales Parts—Service Contracts–Quick Lane     5445
    Cost of Sales—Parts—Service   6540  
    Cost of Sales—Parts—Service–Quick Lane   6445  
      Inventory—Parts—FoMoCo     1400
             
  Parts returned under Inventory Protection Plan GJ    
    Ford Receivable—Other   1200  
    Parts Discount Earned   6550  
    Parts Discount Earned–Quick Lane   6560  
    Parts Return and Handling Charges   6580  
      Inventory—Parts—FoMoCo     1400
      Inventory—Parts—Quick Lane     1405
             
  Unit Down orders and critical orders P    
    Inventory—Parts—FoMoCo   1400  
    Inventory—Parts—Quick Lane   1405  
    Parts Return and Handling Charges   6580  
      Accounts Payable—Trade     2100
             
  Accessories installed in a new car I    
    Inventory—New Cars   1300  
      Inventory—Parts—FoMoCo     1400
      Inventory—Parts—Quick Lane     1405
      Labor Sales—Internal—Service     5730
COMMENTS
  • It is recommended that parts sales be costed on an item-by item basis at the time of sale, since this method produces the most accurate cost of sales data and provides the best control of inventory. If parts sales are costed on the basis of estimated categories, percentages used should be verified by test checks of actual item costs over a 30-60 day period every six months. Office Management contains additional information on costing methods.
  • Accounts 1401-1409 may be used to control various types of parts, such as maintenance parts, body parts, accessories, etc.
  • Freight on parts purchased should be charged to Account 7671, Freight—Parts.
  • At least annually, a physical inventory should be taken and the balance in this account adjusted to the physical inventory value through Account 1430, Allowance for Parts Inventory Adjustments—FoMoCo.