Policy Adjustments—Parts – Ford Online Accounting Manual

Expenses

POLICY ADJUSTMENTS—PARTS	EXPENSE ACCOUNT
	7650

ACCOUNT EXPLANATION
TRANSACTIONS
COMMENTS

ACCOUNT EXPLANATION

Expenses related to parts involved in price adjustments made to customers and in replacement of defective parts (other than replacements covered by the Ford Motor Company warranty and policy program).

TRANSACTIONS

			Jrnl.	Dr.	Cr.

Refund to customer for parts price adjustment			CD
	Policy Adjustments—Parts			7650
		Cash in Bank—General			1001

Cost of replacement of defective part (not covered by Ford Motor Company warranty and policy program)			G
	Policy Adjustments—Parts			7650
		Inventory—Parts—Other			1410

COMMENTS

Correction of overcharges on parts sold to customers should be treated as a reduction of the sale previously recorded, not as a charge to this account.
Charges to this account should have the approval of appropriate management.
Adjustments covered by the Ford Motor Company warranty and policy program should be handled as outlined under Accounts 5460/6460 Franchise, 5461/6461 Other Franchise, Sales/Cost of Sales, Parts—Warranty & Policy Claims—Service, or 5520/6520 Franchise, 5521/6521 Other Franchise, Parts—Warranty & Policy Claims—Body Shop.
Variances between amounts claimed and amounts reimbursed under the Ford Motor Company warranty and policy program should be charged to Account 7040, Free Service—New, unless the variance is specifically attributable to the parts department or the service department or body shop, in which case the variance should be charged to Account 7650, or Account 7750, or 7850, Policy Adjustments, as appropriate.