Accounts Payable—New Truck Bodies – Ford Online Accounting Manual

Liabilities and Net Worth

ACCOUNTS PAYABLE—NEW TRUCK BODIES	LIABILITY ACCOUNT
	2160

Amounts due creditors for new truck bodies purchased on open account.

			Jrnl.	Dr.	Cr.

Purchase of new truck body			P
	Inventory—New Trucks			1310
		Accounts Payable—New Truck Bodies			2160

Payment of vendor invoice for new truck body purchased			CD
	Accounts Payable—New Truck Bodies			2160
		Cash in Bank—General			1001

Subsidiary records should support this account.
At month end, the balance in this account should be reconciled to applicable vendor statements.
Debit balances in this account must be investigated and resolved.
Purchase orders authorized by appropriate management should be issued for all purchases. When vendors’ invoices are received, they should be compared with purchase orders for prices, terms, etc., before payment is authorized.
It is important for accounting accuracy that the liability for materials be recorded in the month in which the dealership becomes liable for payment.