245 - Paint & Body Shop Materials

Current Assets

Other Inventories

Synopsis

Account 245

Debits

Credits

  1. The cost of paint and body materials purchased.

  2. The cost of all body shop supplies (masking tape, sandpaper, etc.).

  3. The adjustment necessary when the physical inventory is greater than the account (book) balance.

  1. The inventory value of all body shop materials sold.

  2. The cost of all body shop supplies sold or used.

  3. The inventory value of rubbing compounds, upholstery cleaner, etc., sold or used.

  4. The adjustment necessary when the physical inventory is less than the account (book) balance.

 

 

Remarks:

The recording of purchases of all body and paint materials in an inventory account rather than charging them directly to operations at the time of purchase affords greater control of these materials and will assist in reducing losses.

 

A physical inventory should be taken each month-end and the balance of this account adjusted to agree with the actual value of materials on hand.  The offsetting entry should be to Cost of Sales – Paint, Material & Miscellaneous (Account 707).

 

Inventories should be priced in accordance with the latest cost prices available – at the lower of cost or market value.

 

In taking the monthly physical inventory, all applicable materials should be counted including those loose or in bulk form, except open items of less than a gallon, or other small quantities.

 

The total cost of pint and quart cans of thinner and paint should be charged out as each can is opened.  Once opened thinner evaporates and paint hardens, therefore, open cans should not be inventoried at month-end.

 

Adequate internal controls should be maintained in dispensing these materials.

Note: