October 30, 2016 admin

Finance Contracts Income—New

Sales and Cost of Sales

FINANCE CONTRACTS INCOME—NEW ACCOUNT
5000

ACCOUNT EXPLANATION

Income from the sale of new vehicle finance contracts to finance institutions. (For recreation vehicles, see Account 9000).

*Refer to Chart of Accounts for current applicable Sales/Cost of Sales account numbers
TRANSACTIONS
  Jrnl. Dr. Cr.
  Deferred portion of finance income on finance contract on new vehicle NV
    Finance Receivables—Deferred 1800
      Finance Income—New 5000
             
  Portion of finance income on finance contract on new vehicle currently due and payable to the dealership NV
    Finance Receivables—Current 1280
      Finance Income—New 5000
COMMENTS
  • As finance participation varies with each finance institution, income should be calculated and recorded on an individual contract basis when the sale of the vehicle is recorded.
  • See Account 5010 for a discussion on how to handle adjustments to Finance Contract Income.
  • Dealership records should be reconciled each month with the statements received from the finance institutions.
  • Since special treatment of this account may be required for income tax purposes, dealers should consult tax counsel.