244 - Gas, Oil & Grease

Current Assets

Other Inventories

Synopsis

Account 244

Debits

Credits

  1. The cost of gas, oil, and lubricants purchased, including brake fluid, antifreeze, solvents, etc.

  2. The adjustment required when the physical inventory is greater than the account (book) balance.

  1. The inventory value of gasoline, oil, and lubricants sold or used internally.

  2. The inventory value of brake fluid, antifreeze, solvents, etc. sold or used internally.

  3. The adjustment required when the physical inventory is less than the account (book) balance.

 

 

Remarks:

Close inventory control of this account is recommended to minimize shrinkage and other losses.

 

A physical inventory should be taken each month-end and the balance of the account adjusted to agree with the actual value of materials on hand.  The offsetting entry should be Cost of Sales – Gas, Oil and Grease (Account 690), or Cost of Sales – Gas, Oil and Grease – Express Service (Account 683).

 

Inventories should be priced in accordance with the latest cost prices available – at the lower of cost or market value.  Unless costing of materials sold or used is accurate, sizeable adjustments will be necessary at month-end to adjust the account balance to the physical inventory total value.

 

Various materials are sold and costed in different ways.  Some are sold by the weight while others are sold by volume.  Costing methods and prices should be reviewed periodically to permit costing of material sold and dispensed to be as accurate as possible.

 

Containers of material other than those being currently used should be kept in the parts department, when possible, to afford protection against losses.

 

When gasoline is not carried in stock for resale, purchases may be charged directly to the appropriate expense account.  Bulk purchases may be charged to Account 244 and internal consumption recorded as a direct relief of inventory by a charge to the appropriate expense account.

 

Fuel oil purchases for heating purposes should not be charged to this account, but should be charged to Account 87 – Heat, Light, Power and Water.

Note: