205 - Contracts in Transit

Current Assets

Cash & Contracts

Synopsis

Account 205

Debits

Credits

  1. The net amount (unpaid balance) of customer finance contracts offered and/or submitted to financial institutions.

  1. The amount(s) received from finance contracts accepted.

 

 

Remarks:

Contracts in Transit represent the amount due from finance institutions on customer finance contracts.

 

Finance contracts should be reviewed daily to determine that remittances are received promptly.  Any contracts or balances outstanding more than three days should be investigated to determine the cause of the delay and any issues resolved.

 

The customer's purchase order, vehicle sales invoice, and the finance contract details should correspond; discrepancies may lead to legal complications.

 

Contracts in transit should not be confused with Vehicle Accounts Receivable (Account 222).

 

At month-end, the Contracts in Transit account balance should be reconciled with a detailed schedule by stock number, customer name, or VIN number.

Note: