478A – GAP Insurance Contracts

New Subaru Department

Sales Synopsis

Account 478A

Debits

Credits

 

 

  1. Commissions earned on GAP insurance sold to customers.

678A – GAP Insurance Contracts

New Subaru Department

Cost of Sales Synopsis

Account 678A

Debits

Credits

  1. Adjustments other than charge backs to reduce GAP Insurance Income.  Use Account 476A – Charge Backs & Repo Losses to record charge backs due to early termination or cancellation of insurance for any reason.

 

 

 

Remarks:

 

Insurance commission income should be calculated at the time the deal is finalized.  Insurance income should then be recorded in the accounting records at the time the vehicle sale is recorded.

Insurance carriers should provide detailed schedules of commissions owed to the retailer.  Reconcile these schedules against the insurance income recorded for each transaction.  Any discrepancies of income calculation should be charged back to Account 478A.  Credit the sales price of the GAP Insurance contract to 478A and debit the cost of the contract to Account 678A.  Any subsequent cost adjustments should go to Account 678A.

Charge backs on insurance income for early termination or due to vehicle repossession should be charged to Account 476A – Charge Backs & Repo Losses.

Note: