249 - Tires

Current Assets

Other Inventories

Synopsis

Account 249

Debits

Credits

  1. The cost of all tires and tubes purchased.

  2. The net increase in the cost of tires and tubes exchanged and placed in stock.

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

  1. The inventory value of tires and tubes sold.

  2. The net decrease in the cost of tires and tubes exchanged and placed in stock.

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

 

 

Remarks:

Tires purchased through manufacturers’ parts channels should be inventoried in this account.

 

Cost of sales of tires and tubes should be at actual cost of each item.

 

The transfer of tires between vehicles, or special tires installed on new vehicles at the time of sale, should be properly documented and treated as inventory transfers with the net difference in cost adjusted to the proper inventory accounts.

 

Inventory records should be accurately and currently maintained to minimize "shrinkage" losses, avoid an unbalanced stock, and maximize gross profit potential.

 

Each month-end, this account balance should be in agreement with a physical inventory.  Any difference between the book value and the physical inventory value should be debited or credited to Cost of Sales – Tires (Account 681).

Note: