October 30, 2016 admin

Customer Service Contracts

Liabilities and Net Worth

CUSTOMER SERVICE CONTRACTS LIABILITY ACCOUNT
2315

ACCOUNT EXPLANATION
Amount owed to customers on unredeemed portion of service coupon books and customer guarantee contracts.

Extended Service Plan offered by the company.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Sale of lubrication coupon book to customer CR
    Cash in Bank—General 1001
      Customer Service Contracts 2315
             
  Labor performed under guarantee contract PS
    Customer Service Contracts 2315
      Sales—Labor—Repair Shop 3600
             
  Coupons not redeemed prior to expiration date SE
    Customer Service Contracts 2315
      Other Income 9300
             
  Sale of a new vehicle with an Extended Service Plan contract NV
    Cash Sale 1010
      Sales & Use Taxes 2150
      Customer Service Contracts     2315
      Sales—New Vehicle     3000-
etc.
      Service Contract Income—New     5040
           
  Registration fees billed to dealer on the warranty and policy settlement statement and charged to the dealership parts account P  
    Customer Service Contracts   2315
      Accounts Payable—Trade     2100
COMMENTS
  • Sales of service coupon books and customer guarantee contracts may require special handling for income tax purposes. Tax counsel should be obtained as necessary.
  • See current Extended Service Plan brochure for details on availability. Also, it is recommended that the “1863s” be clearly identified so they can be readily distinguished form regular warranty claims.