Policy Adjustments—Service – Ford Online Accounting Manual

Expenses

POLICY ADJUSTMENTS—SERVICE	EXPENSE ACCOUNT
	7750/7950

ACCOUNT EXPLANATION
TRANSACTIONS
COMMENTS

ACCOUNT EXPLANATION

Expenses related to labor and sublet repairs involved in price adjustments made to customers and correction of faulty workmanship (other than repairs covered by the Ford Motor Company warranty and policy program).

TRANSACTIONS

			Jrnl.	Dr.	Cr.

Refund to customer for service price adjustment			CD
	Policy Adjustments—Service			7750
	Policy Adjustments—Service—Quick Lane			7950
		Cash in Bank—General			1001

Cost of technicians’ time in correcting faulty repair work			I
	Policy Adjustments—Service			7750
	Policy Adjustments—Service—Quick Lane			7950
		Inventory—Labor in Process			1440

COMMENTS

Correction of overcharges on labor and sublet repairs sold to customers should be treated as a reduction to the sale previously recorded and not as a charge to this account.
Charges to this account should have the approval of appropriate management.
Policy adjustments allowable under the Ford Motor Company warranty and policy program should be handled as outlined under Accounts 5720/6720, Sales/Cost of Sales—Labor—Warranty & Policy Claims—Service, and Accounts 5830/6830, Labor—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 7050, Free Service—New, unless the variance is specifically attributable to the parts department, the service department, or the body shop, in which case the variance should be charged to the Policy Adjustments accounts: 7650 (Parts), 7750 (Service), or 7850 (Body Shop), as appropriate.
See also Account 7850, Policy Adjustments—Body Shop.