October 30, 2016 admin

Parts—Internal—Service

Sales and Cost of Sales

PARTS—INTERNAL—SERVICE ACCOUNT
SALES  5470/5471/5475/5476
COST OF SALES  6470/6471/6475/6476

ACCOUNT EXPLANATION

Sales: Internal selling price of parts sold to other departments in connection with new vehicle preparation, installation of accessories on new vehicles, used vehicle reconditioning, and maintenance of company vehicles.

Cost of Sales: Inventory value if internal parts sold.

NOTE: Dealers with competitive franchises (Non FoMoCo) separate parts and report FoMoCo (franchise) parts in Account 5470/6470 and Non FoMoCo (other franchises) in Account 5471/6471.

*Refer to Chart of Accounts for current applicable Sales/Cost of Sales account numbers
TRANSACTIONS
  Jrnl. Dr. Cr.
  Reconditioning work on used car I
    Inventory—Used Cars 1350,1330
      Sales—Parts to Service—Internal (at internal rate) Franchise/Other 5470,5471
      Sales—Parts to Service—Quick Lane—Internal (at internal rate) 5475
      Sales—Parts to Service—Quick Lane Tires—Internal (at internal rate) 5476
    Cost of Sales—Parts—Internal—Service Franchise/Other 6470,6471
    Cost of Sales—Parts—Internal—Service Quick Lane 6475
    Cost of Sales—Parts—Internal—Service Quick Lane Tires 6476
      Inventory—Parts—Ford/Other 1400,1410
      Inventory—Parts—Quick Lane/Tires     1405,1406
             
  Parts installed on company vehicle I
    Equipment & Vehicle Maintenance—General 8780
      Sales—Parts—Internal—Service (at internal rate) Franchise/Other 5470,5471
      Sales—Parts—Internal—Service—Quick Lane (at internal rate)  
      Sales—Parts—Internal—Service—Quick Lane Tires (at internal rate)  
    Cost of Sales—Parts—Internal—Service Franchise/Other 6470,6471
      Inventory—Parts—Ford/Other 1400,1410
      Inventory—Parts—Quick Lane/Tires     1405,1406
           
  Floor mat protectors sold for general use in used car department on a counter ticket I  
    Maintenance & Policy—Used   7230
      Sales—Parts—Internal—Service (at internal rate) Franchise/Other     5470,5471
    Cost of Sales—Parts—Internal—Sevice Franchise/Other   6470,6471
    Cost of Sales—Parts—Internal—Service—Quick Lane (at internal rate)   6475
    Cost of Sales—Parts—Internal—Service—Quick Lane Tires (at internal rate)   6476
      Inventory—Parts—Ford/Other     1400,1410
      Inventory—Parts—Quick Lane/Tires     1405,1406
COMMENTS
  • Parts sold to other departments should be priced at a level sufficient to recover the direct cost of the parts plus an equitable share of the overhead of the parts department, and should not exceed the retail selling price. Two suggested methods of calculating internal parts sales prices are outlined below:
Method 1
Total annual parts department expense
  (Parts sales expense plus the assigned portion of fixed expense from the Departmental Profit Summary, Form FMC 101, or total parts department expense form the Departmental Income and Expense Statement, Form FMC 102)
  Divided by annual cost of parts sales, X 100%
  Equals the percentage to be added to the cost of parts sold internally.
Method 2
  Price parts sold to other departments at inventory cost plus 25%.
  • Parts used within the parts department should be charged to the appropriate asset or expense account at cost.