October 30, 2016 admin

Customer Refunds—Repossessions

Liabilities and Net Worth

CUSTOMER REFUNDS—REPOSSESSIONS LIABILITY ACCOUNT
2320

ACCOUNT EXPLANATION
Refund due the original customer on the resale of a repossessed vehicle that had been returned to Ford or Lincoln-Mercury dealerships which sold them as new or used vehicles.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Record resale surplus from repossessed vehicle, using direct write-off G
    Customer Repossession Refund—New 6080
    Customer Repossession Refund—Used 6180
      Customer Refunds—Repossessions 2320
             
  Payment of repossession surplus refund CD
    Customer Refunds—Repossessions 2320
      Cash in Bank—General 1001
COMMENTS
  • The direct write-off method does not recognize losses until specific repossessions occur. Legal and tax counsel should be consulted regarding the use of this account.
  • This account should be used in the refunding of repossession surpluses to the original customers, as prescribed in Section O (Repossession Practices not available) of the Ford Dealer Accounting Procedure Manual.