October 30, 2016 admin

Notes Payable—Rental Vehicles

Liabilities and Net Worth

NOTES PAYABLE—RENTAL VEHICLES	LIABILITY ACCOUNT
	2540

ACCOUNT EXPLANATION
TRANSACTIONS
COMMENTS

ACCOUNT EXPLANATION

Principal amount due to finance institutions on notes payable secured by vehicles in rental service.

TRANSACTIONS

					Jrnl.	Dr.	Cr.

	Loan from finance company—secured by rental vehicles				CR
		Cash in Bank—General				1001
			Notes Payable—Rental Vehicles				2540

	Payment of monthly installment on note with interest				CD
		Notes Payable—Rental Vehicles				2540
		Rental Vehicle Net Income				5200
			Cash in Bank—General				1001

COMMENTS

Subsidiary records should support this account.
At month end a listing should be made of all unpaid notes on rental vehicles and the total reconciled with the balance in this account.
Interest not paid on a monthly basis should be accrued monthly as a debit to Account 5200, Rental Vehicle Net Income, and a credit to Account 2421, Accrued Interest.
Further details on rental operations are contained in Vehicle Leasing and Rental.