231B - New Vehicles - Other

Current Assets

New Vehicles

Synopsis

Account 231B

Debits

Credits

  1. The cost of all new vehicles (other than Subaru) including factory installed accessories, freight and other related charges.

  2. The internal cost of equipment and accessories installed at the retailer including installation labor.

  1. Inventory value of all new vehicles (other than Subaru) transferred to other dealers, placed in demonstrator service or otherwise disposed of.

  2. The internal cost of equipment and accessories removed from vehicles (other than Subaru).

 

 

Remarks:

New vehicles should be recorded in the new vehicle purchase journal upon the receipt into inventory and also on the subsidiary new vehicle inventory record.

 

New vehicles sold or transferred to other dealers should also be recorded in the new vehicle purchase journal.

 

New vehicles placed in retailer service (lease, driver education, etc.) should be transferred by general journal entry to the appropriate inventory account.  The vehicle inventory record should be removed from the respective new vehicle inventory and updated with sufficient information reflecting the inventory transfer.

 

Proper procedure should be established to assure that all equipment or accessories added to a new vehicle or removed from a new vehicle are properly recorded on the new vehicle inventory record.

 

Any differences between the physical inventory and the book inventory should be resolved prior to the month-end closing.

 

Dealers using the LIFO method of accounting should refer to Reserve for LIFO – New Vehicles (Account 232).

 

Holdback included in the factory invoice total should not be included in the inventory value of new vehicles.  This amount should be deducted from the vehicle invoice total and debited to Holdback Receivables - Other (Account 219).

 

In all instances where new vehicles are purchased from, sold to, or traded with other dealers, they are considered TRANSFERS and should, therefore, be recorded in the new vehicle purchase journal, not in the new vehicle sales journal.

Note: