15 – Interest – Floor Plan

Vehicle Selling Expenses

Synopsis

Account 15

Debits

Credits

  1. The interest expense applicable to vehicles (including demonstrators) financed under a wholesale floor plan financing arrangement.

  2. The month-end accrual of interest owed in the current period, but payable in a subsequent period.

 

  1. The interest earned on cash deposited to reduce the interest charges on the floor plan liability.

  2. The reversal of the month-end accrual for interest on inventory financing.

  3. Distributor/Factory floor plan assistance program reimbursements.

 

Remarks:

Individual wholesale inventory finance notes should be paid off immediately upon disposal of the vehicle.

Accrued interest should be computed from the finance institutions billing, or cut-off date, to the month-end.  The accrued interest should be recorded on a standard entries journal form.

Each item of this expense should be distributed to the New and Used Vehicle Departments, as applicable.

All manufacturers’ reimbursements for floor plan assistance should be recorded in (Account 29 - Floor Plan Assistance).