242B - Parts & Accessories - Other

Current Assets

Other Inventories

Synopsis

Account 242B

Debits

Credits

  1. The cost of all other manufacturer parts purchased, regardless of the source.

  2. The increase in book value for other manufacturer parts on hand as disclosed by physical count.

  1. The cost of all other manufacturer parts sold.

  2. The decrease in book value for other manufacturer parts on hand as disclosed by physical count.

  3. The write-off at cost of all obsolete and scrapped other parts removed from inventory.

 

 

Remarks:

Parts and Accessories incentives and discounts earned on the quantity and method of purchase should not affect the inventory value but should be credited directly to Parts & Accessories Purchase Discount (Account 494B).

 

Transportation charges should be debited to Freight and Express (Account 76).

 

Parts should be individually cost at dealer price as shown in the other manufacturer’s parts price book.  A percentage method of costing is not recommended.

 

The offsetting entry for obsolete and scrapped parts should be Adjustment P & A Inventory (Account 675B).

 

Inventory control and maximization programs within the dealership DMS system should be utilized to assure purchases in quantities sufficient to obtain maximum discounts, minimize shrinkage losses, and avoid an unbalanced stock.

 

It is recommended that parts and accessories on hand be verified by a physical inventory at least once each year and more often, if necessary.

 

Dealers using the LIFO method of accounting should refer to (Account 242C).

Note: