October 30, 2016 admin

Finance Receivables—Deferred

Assets

FINANCE RECEIVABLES—DEFERRED ASSET ACCOUNT
1800

ACCOUNT EXPLANATION
Portion of finance income earned by the dealership on recourse paper but withheld to cover contingent losses on repossessions and customer prepayments.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Deferred portion of finance income earned on used vehicle contract UV
    Finance Receivables—Deferred 1800
      Finance Contracts Income—Used 5100
             
  Reclassification of portion of deferred receivable released from any contingency G
    Finance Receivables—Current 1280
      Finance Receivables—Deferred 1800
             
  Adjustment of account per reconciliation with statement received G
    Finance Receivables—Deferred 1800
      Finance Contracts Income—New 5000
      Finance Contracts Income—Used     x
COMMENTS
  • As finance participation varies with each finance institution, income should be calculated and recorded on an individual contract basis when the sale of the vehicle is recorded.
  • Records should be reconciled each month with the statements received from the finance institutions.