October 30, 2016 admin

Insurance Contracts Adjustments Income—Used

Sales and Cost of Sales

INSURANCE CONTRACTS ADJUSTMENTS INCOME—USED ACCOUNT
5130

ACCOUNT EXPLANATION

Adjustments to income from commissions on the sale of insurance and gap insurance on used vehicles.

*Refer to Chart of Accounts for current applicable Sales/Cost of Sales account numbers
TRANSACTIONS
  Jrnl. Dr. Cr.
  Income charged back due to cancellation of insurance on used vehicle G
    Insurance Income Adjustments—Used 5130
      Finance Receivables—Current 1280
 
  Income charged back due to cancellation of gap insurance on a used vehicle G
    Insurance Income Adjustments—Used 5130
      Finance Receivables—Current 1280
COMMENTS
  • Insurance commission income should be calculated by the dealership and recorded with the sale of the vehicle.
  • Dealership records should be reconciled each month with the statements received from the insurance companies.
  • In some areas, commissions to dealers on the sale of insurance are prohibited by law. Legal counsel should be consulted regarding this matter.