Free Service/Maintenance & Policy—New – Ford Online Accounting Manual

Expenses

FREE SERVICE/ MAINTENANCE & POLICY—NEW	EXPENSE ACCOUNT
	7050

ACCOUNT EXPLANATION
TRANSACTIONS
COMMENTS

ACCOUNT EXPLANATION

Expense (at internal rates) of performing free inspections and service on new vehicles after delivery to customers, and variances between amounts claimed and amounts reimbursed under the Ford Motor Company warranty and policy program, including dealer participation in after-warranty adjustment.

TRANSACTIONS

			Jrnl.	Dr.	Cr.

Free inspection and service on customer’s new car • Record internal sale:			I
	Free Service/Maintenance & Policy—New			7050
		Sales—Parts—Internal—Service (at internal rate)			5470
		Sales—Labor—Internal—Service (at internal rate)			5730

• Record cost of internal sale:
	Cost of Sales—Parts—Internal—Service			6470
	Cost of Sales—Labor—Internal—Service			6730
		Inventory—Parts—Ford			1400
		Inventory—Labor in Process			1440

Warranty claim disallowed per advice from Ford Motor Company and/or AWA			SE
	Free Service/Maintenance & Policy—New			7050
		Ford Receivable—Warranty & Policy Claims			1140

COMMENTS

Labor and material used in accordance with the Ford Motor Company warranty and policy program to correct defects in material and workmanship on new vehicles should be charged to Account 1140, Ford Receivable—Warranty & Policy Claims. Any variance between the amount of the claim and the actual amount reimbursed should be charged to the 7050 Free Service Account, unless the variance is specifically attributable to the parts department, service department, or the body shop, in which case the variance should be charged to Account 7650, Policy Adjustments—Parts, Account 7750, Policy Adjustments—Service, or Account 7850, Policy Adjustments—Body Shop, as appropriate.
If the new car and new truck activities are organized as separate departments, charges to this account should be distributed directly to the departments generating the expense. See Departmentalization for further information.