246 - Sublet Repairs

Current Assets

Other Inventories

Synopsis

Account 246

Remarks:

The entire amount of sublet work, including both labor and material, should be reflected in this amount.

Since the account includes sublet work for mechanical and body and paint repairs, care should be exercised when recording the sales and cost of sales of these repairs since separate sales and cost accounts are provided.

Taking into consideration the profit possibilities, sublet work should be constantly reviewed for the possibility of doing such work in-house.

Individual purchases of sublet work should be authorized by a properly executed purchase order.  The purchase order should be issued based upon a repair order indicating the work to be performed.  The repair order number, the purchase order number, and the vendor's invoice number should be indicated on each document for cross-referencing purposes.

Care must be exercised to assure that all sublet work is charged on a customer, warranty, or internal repair order.  Frequent reconciliation of all repair orders indicating sublet work to be performed, with authorized purchase orders and vendor's invoices covering sublet work, will aid in ensuring all sublet work is charged to the proper sources.

Each month end, a schedule should be prepared listing the cost of each unsold sublet repair.  Any differences between the total of this inventory schedule and the account balance should be located and proper adjustments made.

Note: