DUAS 1 31 18 EF - DealerCONNECT Login · The Dealer Uniform Accounting System (DUAS) ... books of...

FORWARD

TO ALL DEALERS: There is an ever-increasing demand and emphasis placed upon sound business management practices. Good management depends upon prompt and accurate facts to satisfactorily control capital and assure a satisfactory return on investment. The Dealer Uniform Accounting System (DUAS) has been designed to make these facts available to every dealer in an orderly and usable pattern, and also provide management information for quick review and comparison. The System incorporates the latest techniques for accumulation of vital capital and management factors. It also incorporates the actual experiences of dealer accountants in dealerships with varying levels of sales volume. The Dealer Uniform Accounting System has been developed on a “Profit Center” concept. The Profit Center concept provides a measurement of the profit contribution by each center (department) as related to the total operation. The Profit Center concept evolves from the latest accounting techniques used by many successful retail dealers throughout the United States. In recognizing each center (department) as a profit contributor, the DUAS provides specific expense accounts which are directly applicable to the five basic profit centers. These expenses are known as selling expenses for the New and Used Vehicle Departments; and, direct expenses for the Service and Parts Departments. For those dealerships that wish further distribution of expenses down to a departmental operating profit, the DUAS provides for the departmentalization of fixed expenses to the various profit centers. In recognizing the Service and Parts Centers as profit contributors, rather than expense absorbing areas, the Profit Center concept also recognizes the recovery of direct expenses, as well as prime costs, for internal work performed by these two departments.

In summary, the Dealer Uniform Accounting System and Profit Center concept provide for:

1. Improved Profit Planning 2. Proper Measurement of Profit 3. Improved Expense Control

FCA recognizes that the manufacturer and dealer have a mutual responsibility in assuring maximum volume and profits for both parties. It further recognizes that factual information is required to make decisions and establish policies. The Dealer Financial Statement provides these facts when input via the Dial System on a timely basis each month. Your cooperation in following the recommended Dealer Uniform Accounting System will enable FCA to assist you in attaining a higher return on your investment and contribute toward the strengthening of the dealer organization.

F-1 DEALER UNIFORM ACCOUNTING SYSTEM

FCA

(2/18)

TO ALL ACCOUNTANTS – BUSINESS MANAGERS:

An accounting system comprises not only the chart of accounts, books of original entry, and allied forms, but also includes routines and procedures by which all of the records are coordinated and utilized.

An effective accounting system must adequately reflect the various operations and financial position of a business. It must also be sufficiently flexible to meet the requirements of a changing and developing organization.

The Dealer Uniform Accounting System is primarily designed to apply these principles to the business activities of an automobile dealership. However, it also makes provision for inclusion of other business activities with which the dealer may be associated. This manual will explain the application of fundamentals to each particular type of transaction.

Several innovations are now included in the Dealer Uniform Accounting system. These are:

a. Profit Center Concept. b. Redesigned journals to facilitate posting for daily operating control purposes and monthly closing to

the general ledger. c. Redesigned general ledger pages to facilitate compilation and transfer of general ledger date to the

financial statement. d. Separation of the financial statement into carbon multi-leaved sets to eliminate time-consuming

reproduction procedures. e. Separation of financial statement into four separate pages to allow for delegation of final statement

preparation to more than one individual.

The Dealer Uniform Accounting System Manual is not intended to be a text on the principles of accounting or bookkeeping from which a beginner can learn the fundamentals. Basic Accounting or Bookkeeping training is necessary to properly interpret the principles of the Dealer Uniform Accounting System and to maintain the records of the dealership in such a manner that an accurate financial statement can be easily prepared for presentation to the dealer and submission to the Zone Office/Business Center on a timely basis.

The journals of this system, or of any system, are books of original entry and utilize what is known as “one line entry forms.” Special columns with account titles are provided for debit and credit entries, and to facilitate cross- footing for proof of balance.

The Dealer Uniform Accounting System Manual is composed of 12 original entry journals:

Cash Receipts Journal Cash Disbursement and Purchase Journal New Vehicle Purchase Journal New Vehicle Department-Sales Journal Used Vehicle Department-Sales Journal Service and Parts Journal-Repair Order Sales

(2/18)

DEALER UNIFORM ACCOUNTING SYSTEM

FCA F-2

(2/18)

ACCOUNTANTS & BUSINESS MANAGERS – Cont’d.

Parts & Accessories Journal-Counter Sales Warranty Sales Journal & Claims Register Internal Sales Journal Payroll Journal General Journal Standard Entries Journal

The General Ledger is the permanent record in which the transactions, summarized in the journals, are entered in accounts which group together related transactions. Each account in the General Ledger has an account name and number for identification and reference purposes.

The Chart of Accounts is a list of the names and numbers of the accounts that should be used in the General Ledger. Some dealers will not require all of the accounts provided. However, subsidiary ledgers are necessary to record additional detail as to the various items representing the balance of a specific General Ledger Account. An example of this is the recording of amounts due from individual customers.

The following table will assist in analyzing a transaction and in determining the proper entries:

Classification To Increase To Decrease Normal Account of Accounts Account Account Balance Should Show

Assets Debit Credit Debit Liabilities Credit Debit Credit Net Worth Credit Debit Credit Dividend and

Drawing Accounts Debit Credit Debit Expenses Debit Credit Debit Sales Credit Debit Credit Cost of Sales Debit Credit Debit Other Income Credit Debit Credit Other Deductions Debit Credit Debit

Your conscientious adherence to the procedures outlined in this manual will substantially increase your value as an accountant. Properly maintained and utilized, the Dealer Uniform Accounting System and the resultant Dealer Financial Statement become the Dealer’s prime source for appraising the results of his/her planned objectives. The end product of good accounting is Informed Management.

F-3 DEALER UNIFORM ACCOUNTING SYSTEM

FCA

(2/18)

FORWARD

INTRODUCTION

This Chart of Accounts has been designed for the use of all FCA Dealers. It has been prepared in conformity with currently accepted accounting practices for operating and analyzing an automobile dealership.

Sufficient accounts have been provided to meet all conditions which dealers are likely to encounter. The Accounts have been grouped by classifications with the following numbering scheme:

ACCOUNT CLASSIFICATION NUMBERS Assets 100 thru 199 Liabilities and Net Worth 200 thru 299 Expenses 300 thru 399

(New Vehicle 300-319) (Parts & Access. 350-359) (Used Vehicle 320-339) (Fixed Expenses 360-399) (Service Dept. 340-349)

Sales and Cost of Sales 400 thru 599 Other Income 600 thru 699 Other Deductions 700 thru 799 Leasing Operations:

Income: Control Account 615 Sub-Accounts 800-8 thru 899-8

Expenses: Control Account 715 Sub-Accounts 900-8 thru 999-8

Seven letter suffix designations (A thru G) are used in the Sales and Cost of Sales numbering system to distinguish the various types of sales and cost factors. They are:

1 (A) Gross sales price 2 (B) Discount and over allowances (reduction in sales) 3 (C) Base cost 4 (D) Special vehicle income (reduction in cost)

(D) Reconditioning used vehicles (addition in cost) (D) Unapplied time (addition in cost)

5 (E) Repossession losses (addition in cost) (E) Customer Repossession Refund (addition in cost) (E) Quantity purchase discounts (reduction in cost)

6 (F) Finance and insurance income (reduction in cost) (F) Wholesale compensation (reduction in cost)

7 (G) Inventory write down (addition in cost)

Bracketed letters represent normal credit balance accounts and unbracketed letters represent normal debit balance accounts.

Pages should be opened in the ledgers only for such accounts as are required, for example: a dealer selling only car lines would not require inventory, sales, and cost of sales accounts for truck lines, nor would a sole proprietorship require all the net worth accounts necessary for a corporation.

The Chart provides specific accounts for investments in subsidiary companies and separate corporations. Records for these organizations should be maintained separately from records of the automobile dealership. However, other activities, that may or may not be located elsewhere, having a direct relationship to the dealership should be combined on the Dealer Financial Statement.

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FCA 1-1

ASSETS

ACCOUNT PAGE ACCOUNT PAGE NUMBER NUMBER NUMBER NUMBER

CASH AND EQUIVALENT Other Services & Parts Inventories: 101 Petty Cash Fund..............................................................2-1 136-A Gas, Oil & Lubricants....................................................2-41 102 Undeposited Cash...........................................................2-2 136-B Body and Paint Shop Materials....................................2-42 103 Cash in Bank...................................................................2-3 136-C Sublet Work..................................................................2-43 104 Cash on Deposit..............................................................2-4 137 Non-Automotive Inventories.........................................2-44 106 Contracts in Transit.........................................................2-5

RECEIVABLES OTHER CURRENT ASSETS

110 Service and Parts Accounts Receivable..........................2-6 140 Marketable Securities...................................................2-45 111 Vehicle Accounts Receivable..........................................2-7 Prepaid Expenses: 112 Customer Notes Receivable............................................2-8 145-A Advertising...............................................................2-46 114 Other Receivables...........................................................2-9 145-B Insurance.................................................................2-47 Factory Receivables 145-C Interest.....................................................................2-48 116-A Warranty Service Claims/ 145-D Rent.........................................................................2-49 Road Ready Claims..................................................2-10 145-E Taxes and Licenses.................................................2-50 116-A1 WSC – Advance Payment........................................2-11 145-F Other........................................................................2-51 116-B Holdback – New Cars and Trucks............................2-12 116-C Special Vehicle Income.......................................2-13/14 OTHER ASSETS 116-D Floor Plan Allowance................................................2-15 151 Officers’ and Employees’ Accounts..............................2-52 116-E Wholesale Compensation – Parts............................2-16 152 Due from Finance & Insurance 116-F Inventory Rebates...............................................2-17/18 Companies – Deferred............................................2-53 116-G Other.........................................................................2-19 153 Deposits on Contracts..................................................2-54 116-H Dealer Cash/Consumer Rebates..............................2-20 154 Cash Value of Life Insurance.......................................2-55 117 Cash Sales.....................................................................2-21 155-A Driver Education Vehicles............................................2-56 118 Allowance for Doubtful Accounts...................................2-22 155-B Depreciation and Program Allowances - 119 Due from Finance and Insurance Driver Education Vehicles.......................................2-57 Companies – Current................................................2-23 156-A Lease/Rental Vehicles.................................................2-58 156-B Depreciation and Program Allowances -

INVENTORIES Lease/Rental Vehicles............................................2-59 120 Cars – CDJR/Fiat......................................................2-24/25 157 Other Assets and Investments.....................................2-60 123 Trucks – CDJR/Fiat...................................................2-24/25 124 Recreational Vehicles....................................................2-27 LAND, BUILDINGS AND EQUIPMENT 125 Other New Cars and Trucks – Competitive..............2-24/25 160 Land..............................................................................2-61 126 Demonstrators...............................................................2-29 161-A Buildings and Building Equipment................................2-62 127 Used Cars.................................................................2-30/31 161-B Depreciation of Buildings and 128 Used Trucks...................................................................2-32 Building Equipment................................................2-63 129 Certified Pre-owned Vehicle (CPOV).......................2-33A/B 162-A Service Equipment........................................................2-64 130 Parts and Accessories – CDJR/Fiat...............................2-34 162-B Depreciation of Service Equipment..........................2-65 131 Parts and Accessories – Other MFG.............................2-35 163-A Parts and Accessories Equipment................................2-66 132 Inventory Adjustment - Parts & Accessories..................2-36 163-B Depreciation of Parts and 133 Tires and Tubes.............................................................2-37 Accessories Equipment.........................................2-67 134 Other Automobile Inventories........................................2-38 164-A Company Cars and Service Vehicles............................2-68 135-A Labor in Process – Mechanical......................................2-39 164-B Depreciation of Company Cars 135-B Labor in Process – Body and Paint...............................2-40 and Service Vehicles.............................................2-69 165-A Furniture, Signs, and Equipment...................................2-70 165-B Depreciation of Furniture, Signs, and Equipment......................................................2-71 166-A Leaseholds....................................................................2-72 166-B Amortization of Leasehold........................................2-73


1-2 FCA (2/18)

CHART OF ACCOUNTS LIABILITIES AND NET WORTH

ACCOUNT PAGE ACCOUNT PAGE

NUMBER NUMBER NUMBER NUMBER

PAYABLES 217-D Miscellaneous...............................................................3-29 Accounts Payable: 201-A Trade Creditors..........................................................3-1 WHOLESALE FINANCE LIABILITY 201-C Miscellaneous Employee Deductions........................3-2 220 New Cars and Trucks...................................................3-30 201-D Other..........................................................................3-3 226 Demonstrators..............................................................3-31 202 Customer Refunds – Payable.........................................3-4 227 Used Cars and Trucks..................................................3-32 203 Notes Payable................................................................3-5 228-B Used Cars and Trucks CPOV.......................................3-33 205 Dividends Payable..........................................................3-6 230 Other Inventory Finance Liability..................................3-34 206 Vehicle Lien Payoffs.......................................................3-7 207 Vehicle Protection/Extended Warranty – Payable..........3-2 OTHER LIABILITIES 240 Security Deposits: Lease Vehicles...........................3-35

ACCRUED EXPENSES 250 Reserve for Repossession Losses...........................3-36 Payroll and Equivalent: 255 Driver Education Vehicle Liability.............................3-37 210-A Salaries, Wages, Commissions, 256 Lease/Rental Vehicle Liability..................................3-38 Bonuses and Profit Sharing....................................3-9 258 Company Cars and Service Liability........................3-39 210-B Vacation and Time Off Pay......................................3-10 212 Interest..........................................................................3-11 LONG TERM DEBT 213 Insurance......................................................................3-12 260 Notes Payable – Capital Loans.................................3-40 Taxes – Payroll: 262 Subordinated Notes..................................................3-41 214-A F.I.C.A. Withheld and Accrued.................................3-13 263 Mortgages Payable...................................................3-42 214-B Federal Income Tax Withheld..................................3-14 265 Other Notes and Contracts.......................................3-43 214-C Federal Unemployment Taxes.................................3-15 268 LIFO Reserve – Inventory Adjustment......................3-44 214-D State Income Tax Withheld......................................3-16 214-E Local (City & County) Income Tax Withheld............3-17 NET WORTH 214-F State Unemployment Tax........................................3-18 270 Capital Stock – Preferred...............................................3-45 Taxes – Other Than Payroll and Income: 271 Capital Stock – Common...............................................3-46 215-A Sales Tax – Vehicles...............................................3-19 272 Additional Paid in Capital...............................................3-47 215-B Sales and Use Tax – Other Than Vehicles..............3-20 275 Retained Earnings.........................................................3-48 215-C Vehicle License and Title Fees................................3-21 277 Dividends.......................................................................3-49 215-D Real and Personal Property....................................3-22 280 Investments – Proprietor or Partners.............................3-50 215-E State and Local Taxes – Other................................3-23 285 Withdrawals...................................................................3-51 216 Income Taxes...............................................................3-34 290 Adjustments...................................................................3-52 Other Accrued Expenses: 296 Estimated Income Tax – Current Year..........................3-53 217-A Utilities.....................................................................3-25 299 Profit or (Loss) – Current...............................................3-54 217-B Legal and Audit........................................................3-26 217-C Employer’s Pension Contributions......................3-27/28


(2/18) FCA 1-3

CHART OF ACCOUNTS EXPENSE

ACCOUNT PAGE ACCOUNT PAGE

NUMBER NUMBER NUMBER NUMBER NEW VEHICLE – SALES EXPENSE PARTS AND ACCESSORIES DEPARTMENT -

301 Salespersons’ Commissions & Incentives - New............4-1 SALES EXPENSE 302 Sales Managers’ Commissions & 350 Salaries, Wages & Incentives........................................4-41 Incentives – New........................................................4-2 352 Personnel Training........................................................4-42 303 Vehicle Inventory Maintenance.......................................4-3 353 Advertising.....................................................................4-43 304 Policy Service – New......................................................4-4 354 Supplies, Tools and Laundry.........................................4-44 306 Salesperson’s Salaries – New........................................4-5 355 Freight, Express and Shipping......................................4-45 307 Sales Manager’s Salaries – New....................................4-6 356 Policy Adjustments........................................................4-46 308 Other Salaries – New......................................................4-7 357 Vehicle Expense............................................................4-47 309 Advertising – Print, TV, Other – New..............................4-8 358 Depreciation – Equipment.............................................4-48 309-A Advertising – Print, TV, Other Credits – New...............4-8A 359 Maintenance, Repair and 310 Sales Personnel Training – New....................................4-9 Rental – Equipment..................................................4-49 312 Demonstration Expense – New....................................4-10 315 Floor Plan Interest – New.............................................4-11 FIXED EXPENSES 315-A Floor Plan Interest Credits – New..............................4-11A 362 Salaries and Wages – Administrative 316 F & I Managers’ Commissions – New........................4-11B and General..............................................................4-50 317 F & I Managers’ Salaries – New.................................4-11D 363 Employee Benefits.........................................................4-51 318 Advertising – Internet Only – New..............................4-11F 365 Payroll Taxes.................................................................4-52 367 Advertising – General and Institutional..........................4-53

USED VEHICLE – SALES EXPENSE 368 Stationery, Office Supplies and Postage.......................4-54 321 Salespersons’ Commissions & Incentives – Used........4-12 370 Legal, Auditing and Collection Expense........................4-55 322 Sales Managers’ Commissions – Used.........................4-13 371 Other Outside Services.................................................4-56 323 Vehicle Inventory Maintenance – Used.........................4-14 372 Company Car Expense.................................................4-57 324 Policy & Warranty Service – Used.................................4-15 373 Dues, Subscriptions and Contributions.........................4-58 326 Salesperson’s Salaries – Used......................................4-16 374 Data Processing Service...............................................4-59 327 Sales Managers’ Salaries – Used.................................4-17 377 Travel and Entertainment..............................................4-60 328 Other Salaries – Used...................................................4-18 378 Bad Debts......................................................................4-61 329 Advertising – Print, TV, Other – Used...........................4-19 380 Miscellaneous................................................................4-62 330 Sales Personnel Training – Used..................................4-20 381 Interest on Mortgage.....................................................4-63 332 Demonstration Expense – Used....................................4-21 382 Rent...............................................................................4-64 335 Interest on Floor Plan – Used........................................4-22 383 Amortization of Leaseholds...........................................4-65 336 F & I Managers’ Commissions – Used........................4-22A 384 Depreciation Buildings and 337 F & I Managers’ Salaries – Used.................................4-22C Building Equipment...................................................4-66 338 Advertising – Internet Only – Used..............................4-22E 385 Taxes – Real Estate......................................................4-67 386 Insurance – Real Estate................................................4-68

SERVICE DEPARTMENT – SALES EXPENSE 387 Maintenance and Repairs – Real Estate.......................4-69 340-A Salaries, Wages and 388 Interest – (Other than Floor Plan Incentives – Mechanical...........................................4-23 and Mortgage)..........................................................4-70 340-B Salaries, Wages and 389 Insurance – (Other than Real Estate)............................4-71 Incentives – Body & Paint.........................................4-24 390 Taxes and Licenses (Other than 341-A Vacation & Time-Off Pay – Mechanical.........................4-25 Payroll & Real Estate................................................4-72 341-B Vacation & Time-Off Pay – Body & Paint.......................4-26 391 Depreciation – (Other than Buildings 342-A Personnel Training – Mechanical...................................4-27 & Building Equipment)..............................................4-73 342-B Personnel Training – Body & Paint................................4-28 392 Maintenance and Repairs (Other than 343-A Advertising – Mechanical...............................................4-29 Buildings & Building Equipment)..............................4-74 343-B Advertising – Body & Paint............................................4-30 393 Equipment Rental – (Other than 344-A Supplies, Tools & Laundry – Mechanical.......................4-31 Service and Parts Equipment)..................................4-75 344-B Supplies, Tools & Laundry – Body & Paint....................4-32 395 Heat, Light, Power and Water.......................................4-76 345-A Vehicle Expense – Mechanical......................................4-33 396 Telephone......................................................................4-77 345-B Vehicle Expense – Body & Paint...................................4-34 399 Salaries – Owners and Officers.....................................4-78 346-A Policy Adjustments – Mechanical..................................4-35 346-B Policy Adjustments – Body & Paint...............................4-36 348-A Depreciation of Equipment – Mechanical......................4-37 348-B Depreciation of Equipment – Body & Paint...................4-38 349-A Maintenance, Repair & Rental of Equipment – Mechanical..........................................4-39 349-B Maintenance, Repair & Rental of Equipment – Body & Paint.......................................4-40


1-4 FCA (2/18)

CHART OF ACCOUNTS SALES AND COST OF SALES

ACCOUNT PAGE ACCOUNT PAGE NUMBER NUMBER NUMBER NUMBER SALES COST NEW VEHICLE DEPARTMENT SALES COST 401-A 401-C Other New Cars – Retail: Maserati……………….5-4 474-A 474-C Used Trucks – Wholesale..............................5-49 402-A 402-C New Cars – Retail: Fiat – 124 Spider...................5-1 475-A 475-C Used CPOV Cars Retail.................................5-50 403-A 403-C Other New Cars – Retail: Fiat/Alfa Romeo………5-7 476-G Used Car Inventory – Writedown....................5-56 404-A 404-C New Cars – Retail: Fiat 500..................................5-1 477-G Used Truck Inventory – Writedown................5-57 405-A 405-C New Cars – Retail: Alfa Romeo Stelvio................5-1 478-E Customer Repossession Refund....................5-58 406-A 406-C New Cars – Retail: Fiat 500 Cabrio......................5-1 479-A 479-C Non-Automotive – Used……………………….5-59 407-A 407-C New Cars – Retail: Challenger.............................5-1 480-E Repossessed Vehicle Losses – Used…….…5-60 408-A 408-C New Cars – Retail: 200 Series 4 Dr. Sedan.........5-1 482-A 482-C Service Contracts – Used...............................5-63 409-A 409-C New Cars – Retail: Charger..................................5-1 483-A 483-C CPOV Finance and Insurance..........................5-64 410-A 410-C Other New Trucks – Retail: Maserati……………5-19 411-A 411-C New Cars – Retail: Alfa Romeo – 4C…...............5-1 484-A 484-C CPOV Service Contracts..................................5-65 412-A 412-C New Cars – Retail: TBD 2.................…...............5-1 485-C Insurance Contracts – Used..........................5-66A 413-A 413-C New Cars – Retail: Fiat 500E – USA Only...........5-1 486-A 486-C Maintenance Only Contracts – Used.............5-66B 417-A 417-C New Cars – Retail: Alfa Romeo Giulia…..............5-1 487-A 487-C Protection Products & Accessories – Used...5-66C 418-A 418-C Other New Trucks – Retail: Fiat/Alfa Romeo…..5-22 489-A 489-C Other F & I – Used.........................................5-66D 419-A 419-C New Cars – Retail: Alfa Romeo – TBD................5-1 490-C F & I Chargebacks – Used.............................5-66E 420-A 420-C New Cars – Retail: 300 Series.............................5-1 491-A 491-C CPOV Non-Automotive & Other – Used.......5-66F 423-A 423-C New Cars – Retail: Viper......................................5-1 492-A 492-C CPOV Insurance Contracts – Used.............5-66G 425-A 425-C Other New Cars – Retail – CDJR………..............5-10 426-A 426-C Other New Cars – Retail – Competitive..............5-13 SERVICE DEPARTMENT 427-A 427-C New Trucks – Retail: Grand Caravan.................5-16 550-A 550-C Customer Labor – Mechanical..........................5-67 428-A 428-C New Trucks – Retail: Pacifica…………………….5-16 551-A 551-C Service Contract Labor – Mechanical...............5-68 429-A 429-C New Trucks – Retail: RAM HD (2500/3500).......5-16 552-A 552-C Warranty Labor – Material................................5-69 430-A 430-C New Trucks – Retail: Cherokee..........................5-16 553-A 553-C Road Ready Labor...........................................5-70 431-A 431-C New Trucks – Retail: Wrangler 4-DR..................5-16 554-A 554-C Labor Internal – Mechanical.............................5-71 432-A 432-C New Trucks – Retail: Wrangler...........................5-16 555-A 555-C Customer Labor – Non-Automotive..................5-72 433-A 433-C New Trucks – Retail: Compass...........................5-16 556-A 556-C Sublet Work – Mechanical................................5-73 435-A 435-C New Trucks – Retail: Durango............................5-16 557-A 557-C Sublet Work – Warranty – Mechanical.............5-74 436-A 436-C New Trucks – Retail: Ram ProMaster City……..5-16 558-A 558-C Quick Service Labor Mechanical......................5-75 437-A 437-C New Trucks – Retail: Ram 1500.........................5-16 559-D Unapplied/Variance Labor – Mechanical..........5-76 438-A 438-C New Trucks – Retail: Grand Cherokee...............5-16 560-A 560-C Customer Labor – Body & Paint.......................5-77 439-A 439-C Other New Trucks – Retail – CDJR……………..5-25 562-A 562-C Warranty Labor – Body & Paint........................5-78 440-A 440-C New Recreational Vehicles – Retail....................5-28 563-A 563-C Labor Internal – Body & Paint...........................5-79 441-A 441-C Other New Trucks – Retail – Competitive...........5-31 564-A 564-C Sublet Work – Body & Paint.............................5-80 442-A 442-C New Trucks – Retail: Renegade…………………5-16 565-A 565-C Sublet Work – Warranty – Body & Paint..........5-81 443-A 443-C New Trucks – Retail: Fiat 500X………………….5-16 566-A 566-C Body and Paint Stop Materials.........................5-82 444-A 444-C New Trucks – Retail: Patriot...............................5-16 567-D Unapplied/Variance Labor – Body & Paint.....5-83A 445-A 445-C New Cars – Fleet................................................5-34 568-A 568-C Service Contracts Sold on Serv. Lane...........5-83B 446-A 446-C New Trucks – Fleet.............................................5-35 448-A 448-C New Trucks – Retail: Ram Chassis Cab 3500....5-16 PARTS AND ACCESSORIES 450-A 450-C Non-Automotive – New.......................................5-36 570-A 570-C P & A – Repair Orders – Mechanical...............5-84 451-A 451-C New Trucks – Retail: Journey.............................5-16 571-A 571-C P & A – Service Contracts – Mechanical.........5-85 452-A 452-C New Trucks – Retail: Ram Chassis Cab 4500....5-16 572-A 572-C P & A – Warranty – Mechanical.......................5-86 453-A 453-C New Trucks – Retail: Ram Chassis Cab 5500....5-16 573-A 573-C P & A – Retail..................................................5-87 454-A 454-C Volume Incentives (New Vehicle).......................5-38 574-A 574-C P & A – Wholesale...........................................5-88

455-E Repossessed Vehicle Losses – New....................5-39 575-A 575-C P & A – Internal – Mechanical..........................5-89 457-F Finance Contract Reserve – New.........................5-40 576-A 576-C P & A – Quick Service – Oil – Lubricants.......5-90A

458-A 458-C Service Contracts – New....................................5-41A 577-A 577-C Service Contracts Sold at Parts Counter.......5-90B 460 Dealer Transfers – Special Income....................5-41B 580-A 580-C P & A – Repair Orders – Body & Paint.............5-91

461-A 461-C New Trucks – Retail: Fiat 500L..........................5-16 582-A 582-C P & A – Warranty – Body & Paint.....................5-92 462-A 462-C New Trucks – Retail: Ram ProMaster................5-16 583-A 583-C P & A – Internal – Body & Paint........................5-93

463-C Insurance Contracts – New................................5-41C 585-E Purchase Discounts – P & A............................5-94 464-A 464-C Maintenance Only Contracts – New...................5-41D 586-F Wholesale Allowance.......................................5-95 465-A 465-C Protection Products & Accessories – New.........5-41E 587-G P & A – Inventory Adjustments.........................5-96 467-A 467-C Other F & I – New...............................................5-41F 590-A 590-C Tires and Tubes................................................5-97 468-C F & I Chargebacks – New………………………..5-41F 591-A 591-C Mopar Express Lane CP Parts.......................5-98A 469-A 469-C Fleet Volume Incentives – Canada Only……..…5-41H 592-A 592-C Mopar Express Lane Svc. Contracts Parts..5-98B

593-A 593-C Mopar Express Lane – Warranty – Parts.......5-98C USED VEHICLE DEPARTMENT 594-A 594-C Mopar Express Lane – Internal – Parts.........5-98D

470-A 470-C Used Cars – Retail................................................5-42 595-A 595-C Non-Automotive and Miscellaneous.................5-99 470-D Reconditioning – Used Cars – Retail..................5-44 596-A 596-C Mopar Express Lane CP Labor....................5-100A

471-A 471-C Used Trucks – Retail.............................................5-45 597-A 597-C Mopar Express Lane Svc. Contracts Labor.5-100B 471-D Reconditioning – Used Trucks – Retail...............5-47 598-A 598-C Mopar Express Lane Warranty Labor..........5-100C

473-A 473-C Used Cars – Wholesale......................................5-48 599-A 599-C Mopar Express Lane Labor Internal.............5-100D DEALER UNIFORM ACCOUNTING SYSTEM

(2/18) FCA 1-5

OTHER INCOME AND OTHER DEDUCTIONS LEASING

ACCOUNT PAGE NUMBER NUMBER

OTHER INCOME

466-C Doc Fee/Administrative Fee – New………………………6-1 488-C Doc Fee/Administrative Fee – Used……………………..6-2 601 Cash Discounts Earned...................................................6-3 603 Interest Earned................................................................6-4 608 Gain on Disposal of Capital Assets.................................6-5 609 Miscellaneous Income.....................................................6-6 610 LIFO Adjustments............................................................6-7 615 Vehicle Lease and Rental Income...................................6-8

OTHER DEDUCTIONS 701 Cash Discounts Allowed..................................................6-9 704 Bonuses.........................................................................6-10 708 Loss on Disposal of Capital Assets...............................6-11 709 Miscellaneous Deductions.............................................6-12 710 LIFO Adjustments..........................................................6-13 715 Vehicle Lease and Rental Expense...............................6-14

LEASE AND RENTAL INCOME 803-8 Lease Income...................................................................7-3 807-8 Rental Income..................................................................7-4 809-8 Gain or Loss on (L&R) Vehicles…...................................7-5

EXPENSES DIRECT 920-8 Gasoline...........................................................................7-6 922-8 Maintenance and Repairs................................................7-7 927-8 Licenses, Titles and Taxes...............................................7-8 928-8 Depreciation.....................................................................7-9 929-8 Insurance.......................................................................7-10 930-8 Interest...........................................................................7-11

SELLING 940-8 Salaries, Wages and Commissions...............................7-12 945-8 Company Cars...............................................................7-13 947-8 Pick-up and Delivery......................................................7-14 949-8 Advertising & Promotion................................................7-15 951-8 Bad Debts......................................................................7-16 955-8 Miscellaneous................................................................7-17

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FCA

(2/18)

CURRENT ASSETS Account 101

PETTY CASH FUND

DEBIT with:

1. The amount set aside when the Petty Cash

Fund is established, and for any increase in the amount of the fund.

CREDIT with:

1. Any decrease in the amount of the fund, or when the fund is eliminated.

CAUTION: The amount of the Petty Cash Fund should be held to minimum requirements. Large sums should not be paid out of the Petty Cash Fund. Payroll or payroll advances should not be made from the Petty Cash Fund. Cash received in the regular course of business should not be commingled with Petty Cash. All Petty Cash Vouchers should be controlled and accounted for numerically.

Procedure:

This is a fund set aside for use (1) to pay small purchases that cannot conveniently be paid by check, and (2) as a change fund.

The Petty Cash Fund should be divided to establish:

1. A Petty Cash Fund used only to pay small bills. 2. A change or Cashier Fund(s).

Disbursements from the Petty Cash Fund should be recorded and explained on a Petty Cash Voucher, form DUAS- 123. Petty Cash Vouchers should be pre-numbered. They should be issued and accounted for in numerical sequence. No Petty Cash Vouchers should be destroyed. If, for any reason, a voucher is spoiled, it should be marked "VOID" and filed in proper numerical order with the other vouchers.

The voucher serves as a receipt from the person receiving the money. Vouchers should be prepared in ink, signed by recipient, and approved by the proper person(s). Paid invoices should be attached to the related voucher supporting the disbursement of funds. At the end of each month, or at more frequent intervals, if necessary, all vouchers should be summarized on a Petty Cash Summary Envelope, Form DUAS-331, for reimbursement to the fund. All Petty Cash Vouchers, paid bills, and Petty Cash Summary Envelopes should be properly cancelled when paid.

The sum of all Petty Cash Vouchers on hand, plus actual cash, should always equal the amount of the Petty Cash Fund. It is recommended that checks issued to reimburse the fund be made payable to the custodian of the fund, i.e., J. H. Doe - Petty Cash.

(2/18)


FCA 2-1


UNDEPOSITED CASH

DEBIT with:

1. All cash received. 2. Cash overages.

CREDIT with:

1. All daily bank deposits.

CAUTION: The balance exceeding the amount of the Cashier Fund represents undeposited receipts. All cash received should be deposited each banking day, intact as received. No money should be paid out of the Undeposited Cash Account.

Procedure:

This is a clearing account for all cash received in the ordinary course of business and not yet deposited in the bank.

All cash received, regardless of the source, should pass through the hands of the Cashier, or other responsible person, for proper recording. It is recommended that individual, pre-numbered Cash Receipts, Form DUAS-101, be used.

NOTE: Customer finance company payments should be in the form of cash or money order only, and should

be recorded in a separate receipt book. Such payments should be remitted to the finance company daily. (Refer to Account 201-D for additional information.)

Receipts that are voided should carry an explanation thereon and all copies kept intact. It is recommended that voided receipts be recorded in the Cash Receipts Journal in numerical sequence with other receipts for accountability.

Receipts from a third party (one party making payment of another's account) or endorsed checks (where a third party is the maker) should indicate the names of both parties. For legal reasons, all receipts should bear the full signature of the Cashier rather than being merely initialed.

It is recommended that all checks received, be endorsed immediately with the dealership bank deposit stamp. This practice will serve to safeguard both the dealership and the customer in the event a check is lost or stolen.

Cash overages and shortages should be recorded daily. Overages should be recorded in the Cash Receipt Book and included in the bank deposit. Shortages in the daily deposit should be charged/debited to Account 709, not taken out of the petty cash box.

2-2 DEALER UNIFORM ACCOUNTING SYSTEM

FCA

(2/18)

CURRENT ASSETS Account

CASH IN BANK 103

DEBIT with:

1. The total of all cash deposited. 2. Stop payment orders on issued checks

that may be: A. Lost B. Incorrect

3. Contracts and Drafts deposited by a third party, i.e., sight drafts.

4. Bank Credit Memorandums issued.

CREDIT with:

1. The amount of all checks issued. 2. Bank Debit Memorandums issued. 3. Customer checks returned for:

A. Insufficient Funds B. Stop Payment

CAUTION: Daily receipts should be deposited intact each day. Night depository facilities should be used on business days when banks are closed and when sizable amounts of cash are received after office hours. The check protector/writer and all unused checks should be properly safeguarded to minimize the possibility of being stolen, lost, or misused. E.F.T. Electronic Funds Transfer must be arranged in order to process payments to DAAs. Dealer must be on E.F.T. to receive funds electronically. Dealer must also pay FCA with E.F.T.

Procedure:

Whenever separate bank accounts are maintained (general, payroll, trust, etc.) the basic Cash In Bank account number (103) may be sub-accounted by adding a letter suffix, e.g., Cash In Bank–General, Account 103-A; Cash In Bank–Bank Credit Cards, Account 103-B; Cash in Bank-Payroll Account 103-C; etc. If more than one bank account is maintained, a separate general ledger sheet, properly identified, should be provided for each account. The balances in these accounts should be combined into one total for financial statement purposes.

Deposit slips should be prepared in duplicate, but preferably in triplicate, with copies distributed as follows:

Original–retained by bank Duplicate–authenticated by bank and returned to dealership Triplicate–authenticated by bank and returned directly to dealer's attention by bank

All checks should be listed on the deposit slip indicating the name of the maker and the name of the endorser when applicable. This procedure will facilitate identification of all receipts being deposited.

Voided dealership checks should remain intact and the signature area punched or removed to preclude possible future use. Voided checks should be recorded in the Cash Disbursements Journal in their proper numerical sequence with other checks for accountability.

Bank service charges, charge backs, and other bank debit memorandums should be properly and promptly recorded in the Cash Disbursement and Purchase Journal so that the "Bank" balance can be accurately and readily ascertained.

The month-end general ledger balance should be reconciled with the balance shown on the bank's statement. Any variances should be promptly investigated and resolved. Bank Reconciliation, Form DUAS-379, should be used for this purpose.

(2/18)


FCA 2-3


CASH ON DEPOSIT

DEBIT with:

1. The total amount of cash deposited with a

finance institution in an interest bearing account.

2. The amount of cash that is on deposit in certificates of deposit, high interest yield savings accounts, CMA, etc.

CREDIT with:

1. The amount of "Cash On Deposit" which financing institution applies against outstanding floor plan liability.

2. The amount of "Cash on Deposit" returned to dealership by financing institution.

CAUTION: The balance in this account should represent the amount of excess cash deposited with financing institution(s) in interest bearing accounts.

Procedure:

Finance institution statements should be reconciled immediately upon receipt.

The amount of interest earned on the monies deposited should be recorded as follows: 1. Interest earned on cash deposited in certificates of deposit, high interest yield savings accounts, etc., should

be a credit to Account 603, Interest Earned. 2. Interest earned on cash deposited to reduce the monthly interest charges on floor plan liability, should be a

credit to Account 315, Interest On Floor Plan Expense-New.


FCA

(2/18)


CONTRACTS IN TRANSIT

DEBIT with:

1. The net amount (unpaid balance) of

customer finance contracts offered and/or submitted to financing institutions.

CREDIT with:

1. The amount(s) received from finance institutions on customer finance contracts accepted.

CAUTION: The customer's purchase order, the vehicle sales invoice, and the finance contract should correspond in details; discrepancies may lead to legal complications.

Contracts in Transit should not be construed as Vehicle Receivables (Account 111).

Procedure:

Finance contracts should be reviewed daily to determine that remittances are received promptly. Any contracts or balances outstanding more than two or three days should be investigated to determine the cause of the delay and to ascertain when payment may be received.

At each month-end, a list of contracts for which payments have not been received should be prepared on Monthly Analysis Summary, Form DUAS-373, or a Computer generated schedule with a list of outstanding contracts by name and customer number.

To improve control of this account and facilitate collection follow up, the month-end schedule should be prepared as follows:

Finance Customer Contract Date Amount Date Paid Company Name Date Submitted

(2/18)


FCA 2-5


SERVICE AND PARTS ACCOUNTS RECEIVABLE

DEBIT with:

1. The amount of service, parts, and accessory items sold to customers on open account.

2. C.O.D. shipments of parts and accessories sold to customers.

3. Customers' checks returned by the bank. (Separate account for NSF Checks)

CREDIT with:

1. Payments received from customers on service and parts accounts.

2. Cash discounts allowed for prompt payment.

3. Credit Memoranda issued to customers for service and parts adjustments.

4. Accounts determined to be uncollectible. Separate allowance for doubtful accounts should be used for the reserve.

CAUTION: This is a control account. The account balance represents the total of all unpaid balances in the Accounts Receivable Subsidiary Ledger, for all open account sales (including Non-Automotive and Other Automotive merchandise) by the Service and Parts Departments.

The responsibility of extending credit and collection activities should be delegated to one person. New accounts should be added only after a complete credit investigation has been made.

Procedure:

Credit once established should be continued only as long as the customer maintains his account on a current basis. Collection follow-up action should be taken as soon as the account becomes past due. Collection follow-up information should be recorded on the individual customer's ledger sheet, and on the accounts receivable aged analysis prepared each month-end.

Each month-end this account balance should be in agreement with the subsidiary ledger. The subsidiary ledger balances should be scheduled. A Trial Balance and Analysis of Receivables with Collection Follow-Up sheet should be used.

Credit balances in this account should be shown on Line 7 under Current Liabilities on the financial statement.

A diligent, systematic collection effort of all accounts will lessen bad debt losses.

A separate sub account could be maintained for all NSF checks. (Sub account 110-A)

See Account 378, Bad Debts, for handling of write-offs, before uncollectible accounts are written off, authorization of Management should be obtained.


FCA

(2/18)


VEHICLE ACCOUNTS RECEIVABLE

DEBIT with:

1. All vehicle deposits applied against

customer purchases. 2. The amounts of vehicle sales to customers

on open account. 3. Vehicle customers' checks returned by the

bank uncollected, (Separate account for NSF Checks should be scheduled).

CREDIT with:

1. Customer deposits received on future vehicle sales.

2. The amount of vehicle account payments received.

3. Appraised value of used vehicles taken in trade (See NOTE).

4. Accounts ascertained to be uncollectible.

CAUTION: This is a controlled account of all unpaid balances in the Vehicle Accounts Receivable Subsidiary Ledger, for all open account sales (including Non-Automotive and Other Automotive merchandise) sold by the New and Used Vehicle Departments. This account should be scheduled and controlled by Customer number, or vehicle VIN number.

Contracts in Transit and Cash Sales should not be recorded in this account.

To minimize collection problems each open account balance should be secured by a contract (discountable at a finance company or bank), or by a properly executed purchase order for fleet accounts.

Procedure:

The Sales Manager, or other authorized person, should check to verify that all vehicle documents are in order and that all cash due on each vehicle sale has been received before the vehicle is released to the customer.

Each month-end, individual customer's account balances should be scheduled. A Trial Balance and Analysis of Receivables with Collection Follow-Up sheet should be used. The total of the amounts listed should agree with the balance in this account.

Credit balances in this account should be shown on Line 7 under Current Liabilities of the financial statement.

Collection follow-up information should be recorded on the accounts receivable schedule prepared each month-end.

A diligent, systematic collection effort of accounts will lessen bad debt losses.

NOTE: When a used vehicle is taken in trade prior to the delivery of the new vehicle, it is recommended that

a journal entry be made charging the used vehicle inventory with the appraised value of the unit. The offsetting credit should be to this account for the same amount. The customer's receivable account card should show the amount of the deposit as equal to the appraised value of the used vehicle, with a memo amount equal to the overallowance. At the time the new vehicle order is written the appraised value, or the amount the customer would receive in cash if the order were cancelled, should be noted on both copies of the new vehicle order. This procedure should be followed to avoid any misunderstanding as to the amount due the customer if the order is cancelled. At the time of the retail delivery of the new vehicle, the Vehicle Accounts Receivable in the sales journal should be debited for the net amount of the deposit, and the overallowance column debited for actual overallowance as shown on the customer's receivable account card.

(2/18)


FCA 2-7


CUSTOMER NOTES RECEIVABLE

DEBIT with:

1. The face value of notes received on

vehicle sales. 2. The face value of notes accepted on

service and parts sales. 3. Deferred Certificates from finance

companies. 4. Other notes received.

CREDIT with:

1. Collections from customers on notes. 2. Payments received from finance

companies on Deferred Certificates. 3. The unpaid balance of note(s), when the

collateral securing the note(s) has been repossessed.

4. Notes and Deferred Certificates ascertained to be uncollectible.

CAUTION: This is a control account and the account balance represents the total of the unpaid balances of all notes in the Subsidiary Ledger.

"Side Notes" accepted in lieu of cash on vehicle sales should be discouraged and avoided.

All notes, regardless of their source, should be recorded on the dealership's books.

Procedure:

Deferred Certificates are instruments issued to dealerships by finance institutions for amounts withheld from the principal sum of the contracts when they are discounted. They become collectible at a specified future date, usually on or before the final maturity date of the contract.

The total amount of Deferred Certificates and "Side Notes" (notes accepted in lieu of cash) on vehicle sales that are financed should be reserved 100% as doubtful accounts.

Notes Receivable represent dealership cash funds that are invested in previous sales, and prudence should be exercised to insure that such funds are profitably converted back to the cash position.

Each month-end, this account balance should be in agreement with a detailed schedule. Prepare a Trial Balance and Analysis of Receivables with Collection Follow-Up sheet.

NOTE: Interest income derived from notes should be taken into earnings, as installments are paid. At such

time, the portion representing interest earned should be credited to Interest Earned, Account 603, or, in the case of vehicle notes, the applicable Finance and Insurance, Accounts 457-F or 481-F, in accordance with existing tax regulations. The application of interest to Finance and Insurance Income will help defray any repossession losses.


FCA

(2/18)


OTHER RECEIVABLES

DEBIT with:

1. Amount of vehicles, service, parts, and

accessories sold to a leasing subsidiary company on open account.

2. Direct leasing receivables resulting from leases written by the dealership.

3. All amounts due resulting from retail leasing sales to financial institutions.

4. Amounts due from Dealer Group (advertising) Funds. i.e., PPA, DAA Monies.

5. All other receivables, including manufacturers other than FCA, not provided in the Chart of Accounts.

CREDIT with:

1. Payments received on accounts. 2. Cash discounts allowed for prompt payment. 3. Adjustments in accounts. 4. Accounts determined to be uncollectible.

CAUTION: This is a control account and the account balance represents the total of the unpaid balances of all individual accounts as detailed in the subsidiary ledger. Each sub account should be scheduled.

Use this account for all factory receivables due from manufacturers other than FCA.

Procedure:

This account may represent numerous types of receivables. Individual subsidiary ledgers schedule should reflect all pertinent information to document the various receivables.

The PPA amount on the factory invoice should be setup as a receivable from the DAA in this account. These amounts are included on the direct factory invoices together with the EB/PF charges (if elected). The PPA monies are an offset to the vehicle inventory cost at time of stocking into the dealership inventory.

All amounts due in settlement of retail leasing sales to financial institutions should be handled through this account for better internal control.

This account should NOT be used to record security deposits on lease agreements held by the dealership. See Security Deposits: Lease Vehicles, Account 240.

Lease vehicle agreements normally stipulate payment in advance on a monthly basis by the lessee. That is to say, billings made on the 25th of the current month, are due and payable on the 1st of the following month. Income is taken in the month in which earned (whether or not payment is received); therefore, billings are not recorded until the 1st of the month following the billing date. NOTE: This means that billings are considered PAST DUE if not paid by the 1st of the month following the billing date.

Each month-end the individual account balances should be scheduled. A Trial Balance and Analysis of Receivables-with Collection Follow-Up sheet should be used.

Collection follow-up information should be recorded on the individual account ledger sheets and on the schedule prepared each month-end.

Credit balances in this account should be shown on Line 7 of the financial statement under Current Liabilities.

(2/18)


FCA 2-9

CURRENT ASSETS Account 116-A

FACTORY RECEIVABLES: WARRANTY SERVICE CLAIMS/ROAD READY CLAIMS

DEBIT with:

A. The amount of warranty repairs submitted

to the factory (less any deductible charges) covering:

1. Labor 2. Replaced parts and accessories 3. Sublet work

B. The amount of transportation claims filed

and submitted to the factory.

C. The amount of road ready/full tank of gas reimbursement authorized by the factory.

CREDIT with:

1. All cash and/or credits received from the factory applicable to such claims.

2. The amount of all disallowed claims.

3. Any variance between the amount

claimed and the actual amount paid by the factory.

CAUTION: Warranty service records must be maintained in accordance with instructions in the Dealer Warranty and Policy Procedure Manual.

All claims will be processed and paid under existing policies and procedures without regard to the WSC-Advance Payment.

This account should be used for receivables due from FCA only.

Procedure:

This is a control account and the total of the individual open claims listed in the Warranty Sales Journal and Claims Register should agree with this general ledger account balance each month-end.

The offsetting entry for variances (overages, shortages, or denials) between the amount claimed and the amount paid by the factory should be made to Policy Adjustments, Accounts 346A, 346B and 356.

Road ready/full tank of gas reimbursements will be automatically credited to the dealership when notified by the carrier that the vehicle has been delivered.


FCA

(2/18)

CURRENT ASSETS Account

Article 1. 116-A1

FACTORY RECEIVABLES: WSC – ADVANCE PAYMENT

DEBIT with:

1. Any reductions in the amount of the

advance, or upon termination of the program.

CREDIT with:

1. The amount of the original advance payment received.

2. Any subsequent increases in the amount of the advance.

CAUTION: This sub-account is established solely for the purpose of accounting for advance payments made to dealers by FCA in accordance with the Advance Warranty Payment Program.

Procedure:

This is a sub-account of Warranty Service Claims, Account 116-A. This WSC-Advance Payment account should reflect a credit balance at all times. The balance in this account should agree with the monthly amount indicated on the dealer's (parts) statement furnished by FCA.

For Financial Statement Reporting: Account 116-A1 should be recorded on Line 8, Page 1 under Liabilities.

Warranty Claims will continue to be processed and paid under existing policies and procedures without regard to the advance.

(2/18)


FCA 2-11

CURRENT ASSETS Account 116-B

FACTORY RECEIVABLES: HOLDBACK - NEW CARS AND TRUCKS

DEBIT with:

1. The amount of holdback indicated on

the factory invoice, or as computed from the Confidential Price Bulletin, for the specific vehicle.

CREDIT with:

1. All cash and/or credits received applicable

to this account.

CAUTION: The Holdback amount should be recorded by individual unit in a separate schedule. The account balance represents all open items recorded in the New Vehicle Purchases Journal for which payment has not been received.


Procedure:

A subsidiary schedule or ledger is required, as the detail entry will adequately identify each unit and the applicable holdback. When payment is received from FCA, a supporting schedule of units will be enclosed, furnishing adequate information applicable to each unit. The date the payment is received should be recorded in the appropriate Journal opposite the amount due. Any variances between the amount due and the amount received should be located, their source determined, and proper disposition made. The individual unit amounts remaining unpaid should always equal the account balance in the general ledger.

New vehicles purchased from FCA should be recorded at cost less the vehicle holdback and the PPA funds reflected on the invoice.

In all instances where new vehicles are purchased from, sold to, or traded with other direct dealers, they are considered TRANSFERS and should, therefore, be recorded in a separate Dealer Trade Journal.

When new vehicles are transferred between direct dealers and the Holdback is included in the price of the new vehicles being transferred, the Dealer Uniform Accounting Procedure is as follows:

1. New Vehicles Sold to Another Direct Dealer The Holdback received from the direct dealer purchasing the new vehicle should be credited to Miscellaneous Income, Account 609.

2. New Vehicles Purchased From Another Direct Dealer The Holdback paid to the direct dealer selling the new vehicle should be debited to Miscellaneous Deductions, Account 709.

3. New Vehicles Traded Between Direct Dealers The Holdback applicable to new vehicles traded between direct dealers should be handled as outlined in Items 1 and 2 above.

Income resulting from the sale of new vehicles to other direct dealers should be considered as Miscellaneous Income; and losses resulting from the purchase of new vehicles from other direct dealers should be considered as Miscellaneous Deductions. (It is suggested that sub-accounts be used to permit a closer control and reconciliation of the income and losses sustained from these types of transactions.)


FCA

(2/18)

CURRENT ASSETS Account 116-C

FACTORY RECEIVABLES: SPECIAL VEHICLE INCOME

DEBIT with:

1. The amount due from the factory in accordance with Sales/Purchase Incentive Programs applicable to the respective vehicle lines.

2. The amount of the Delivery Allowance due from the factory in accordance with the FCA Management Employee New Vehicle Purchase Plan.

CREDIT with:

1. All cash received and/or credit allowed applicable to the various programs identified in this account.

CAUTION: Sales/Purchase Incentive Programs should be studied thoroughly to assure proper understanding of the specific programs and all provisions. To do so will facilitate proper accounting whereby earnings are recorded in the current period. If more than one Incentive Program is in effect during a specific model year, it is recommended that each program be separately identified and controlled. A Distribution Sheet should be used for this purpose. This account should be used for receivables due from FCA only.

Procedure:

Units properly recorded in the New Vehicle Department-Sales Journal, reflecting the Special Vehicle Income earned under each incentive program, you may consider maintaining an additional receivable schedule or register.

The following accounting procedure provides a uniform method of recording the Special Vehicle Income regardless of the amount and program variations.

BONUS PROGRAM EXAMPLE

1-5 units $25.00 each 6-10 units $50.00 each-retroactive to 1st unit

11 or more units $75.00 each-retroactive to 1st unit

It is recommended that each sales journal sheet, and the general ledger account sheet, be properly identified indicating each bonus level of the incentive program (in this example, the above levels would be recorded):

Step A. When recording each of the first 5 unit sales in the New Vehicle Department-Sales Journal, enter

$25.00 in the Special Vehicle Income column applicable to the make of vehicle to which the bonus applies. This Special Vehicle Income column provides for a dual-posted entry.

Step B. When the sixth unit is sold and before the sale for that unit is recorded in the New Vehicle Department–Sales Journal, the following journal entry should be made in the Special Vehicle Income column: "Retroactive on Units 1 thru 5 (CONTEST NAME)" $125.00

Step C. When recording each of the next 5 unit (6-10) sales, enter $50.00 (next plateau) in the Special Vehicle Income column applicable to the make of vehicle to which the bonus applies.

(2/18)


FCA 2-13


FACTORY RECEIVABLES: SPECIAL VEHICLE INCOME (Cont’d)

Procedure:

As each plateau, or retroactive base, is attained repeat Steps B. and C. above. This method will furnish a continuous schedule of Special Vehicle Income, and may be repeated under each incentive program. Numbering the sales within each car line in the New Vehicle Department-Sales Journal, beginning with the first eligible unit, will permit an accurate computation of the Special Vehicle Income as each retroactive bonus level is reached.

The following provides a uniform method of recording Market Performance Allowance Program, each dealership is assigned a unit number that must be obtained. 100% of this goal must be met before any monies are due. FCA sets the dollar amount. This amount will vary depending upon the percentage over and above the 100% goal. A complete record must be kept. Dealership can verify MPA attainment through the NVDR system. Before month end-closing dealership must make the necessary entries to set up the receivable and entry to cost of sales 401-D thru 449-D.

The schedules should be set up controlled by program number with sales invoice or VIN. Computation of amounts due and Maintenance of subsidiary records should be in accordance with instructions on individual programs. At month end, the total of open and unpaid items should be reconciled to the balance in each account.

The following is a list of FCA Programs that should be in this account.

1. Market Performance Allowance Program 2. Regional Market Allowance Program 3. Stock and Promote 4. Bonus Bank Program 5. Xtreme Profit Sharing

The above programs should all be scheduled separately. FCA will issue a supporting schedule to show each unit. This may be applied to the proper account. This account must be controlled.


FCA

1/09

CURRENT ASSETS Account 116-D

FACTORY RECEIVABLES: FLOOR PLAN ALLOWANCE

DEBIT with:

1. The amount of all Floor Plan Allowance due from the factory.

CREDIT with:

1. The cash received and/or credits allowed applicable to this account.

CAUTION: Any variance between the amount due and the amount received should be investigated, resolved, and proper disposition made.


Procedure:

Floor Plan Assistance Program, all domestic vehicles will be eligible for Floor Plan Assistance that reflects the actual in transit time from the date of collection to the date of delivery to a specific site or to dealership. Only eligible fleet Units will receive 15 day Floor Plan Assistance allowance in addition to the in transit Floor Plan Assistance.

The Supplemental Floor Plan Assistance Program (SFPAP) allowances may necessitate an additional schedule. The SFPAP payment will be made on a weekly basis to the factory invoiced dealer of record, following the reporting of the vehicle sale through the sales of reporting system (NVDR), or 120 days after shipment, whichever occurs first.

The object of these programs is to help reduce the floor plan interest expense, therefore the offsetting credit should be to interest on Floor Plan–New, Account 315-A. In the event the dealership does not floor plan new vehicles, the credit offsetting the receivable should be made to Miscellaneous Income, Account 609.

(2/18)


FCA 2-15

CURRENT ASSETS Account 116-E

FACTORY RECEIVABLES: WHOLESALE COMPENSATION – PARTS

DEBIT with:

1. The amount of Wholesale Allowance earned on applicable parts sales.

CREDIT with:

1. The amount of all cash received

from the factory applicable to this account.

2. The amount of all credits issued by the factory applicable to this account.

CAUTION: Reference is made to the Parts Division's current Schedule of Discounts and Terms of Purchase and reporting forms for policies and procedures governing Wholesale Allowance. To participate in the Wholesale Allowance Plan and take advantage of the additional revenue available, the Dealer, Parts Manager, and Office Manager/Accountant must be thoroughly familiar with the information and conditions outlined in the referenced publications.


Procedure:

The following procedures provide a uniform method of maintaining records and recording income, and are therefore recommended:

1. The Price Symbol (A, B, etc.) should be recorded on each parts counter invoice and repair order directly

following the part number (Example: 2070 158-A). Each qualified wholesale part listed on the invoice or repair order should reflect the allowance amount as published in the Master Parts Price List.

2. When posting parts invoices and repair orders to their respective sales journals, the wholesale allowance amount should be posted at the same time. The blank columns provided in the parts counter sales journal and repair order sales journal may be used as a double-posting column for this purpose. Caption the column Wholesale Compensation-Parts, Account 116-E; at the bottom of the column insert Debit A/C 116-E and Credit A/C 586-F.

3. The Wholesale Allowance Plan's reporting forms should be prepared and maintained on a daily basis. At month-end the forms should be totaled and compared with the total posted to the general ledger account to assure that the amount claimed on the reporting forms is the same as the amount recorded as earned.


FCA

(2/18)

CURRENT ASSETS Account 116-F

FACTORY RECEIVABLES: INVENTORY REBATES

DEBIT with:

1. Amounts due from the factory for: A. Model year-end rebates on new

vehicles in inventory.

CREDIT with:

1. The cash and/or credits received applicable to this account.

CAUTION: Inventory rebates applicable to each vehicle line may be authorized each model year-end by Divisional General Sales Letters. The Parts Return Allowance Plan is described in the Parts Division's current Schedule of Discounts and Terms of Purchase. Compliance with this publication is mandatory to obtain the return credit allowance.


Procedure:

MODEL YEAR REBATES The General Journal entry to record vehicle inventory rebates at model year-end, as evidenced by affidavit submitted to the Car Division, should be as follows:

Factory Receivables–Inventory Rebates Debit 116-F (total amount for qualified units per affidavit)

New Vehicle Inventories Credit 120, etc. (credit to affidavit units still in stock as of date of this entry) and/or Cost of Sales–New Vehicles Credit 401-C, etc. (credit for affidavit units sold from the effective date indicated in the Divisional General Sales Letters to the date of this entry)

Any variances between the original receivable amount and the remittance received should be adjusted through the appropriate cost of sale account if the unit has been sold, or the inventory account if the unit is still in stock. In the event the rebate payment is to be paid to the bank, or finance company, special handling may be required.

(2/18)


FCA 2-17


FACTORY RECEIVABLES: INVENTORY REBATES (Cont’d)

Procedure:

1. Dealerships will receive notification of the return allowance earnings applicable to eligible purchases by a

computed and printed "RA" amount on each invoice. Dealerships should provide for the accumulation of such earnings on a MEMO Basis. This may be accomplished at the same time the invoices are recorded on the Accounts Payable Voucher Envelope (or other subsidiary record) and the Cash Disbursements and Purchase Journal. A blank column should be captioned "MEMO-RA" on each document to designate the accumulated return allowance earned. These amounts may then be posted to the Memo Column of the General Ledger page used for the Parts Inventory, Account 130.

2. After the required forms are submitted and parts return shipment has been authorized, the following entry

should be made and thoroughly explained in the General Journal:

Factory Receivables–Inventory Rebates Dr 116-F (Net amount of return allowance for parts returned.)

Purchase Discounts Dr 585-E (Applicable discounts deducted from the return allowance.)

Inventory–Parts Cr 130 (Gross amount of parts returned.)

This entry will be made throughout the year as each cycled parts return is completed.

NOTE: Inasmuch as the final parts return will be made after December 31, the above Debit to Account

585-E should be made to Adjustments, Account 290, so as to eliminate any distortion in the operating account balances during the subsequent year.

3. When the Credit Memorandum for the return is received, the following entry should be recorded on the

Accounts Payable Voucher Envelope for FCA: Accounts Payable–FCA Dr 201-A

Factory Receivables–Inventory Rebates Cr 116-F

NOTE: The current Plan provides for a cycle carry forward/credit program for excess allowances earned over parts returned. Any credit memorandums received under this program should be credited to Purchase Discounts, Account 585-E.


FCA

1/09

CURRENT ASSETS Account 116-G

FACTORY RECEIVABLES: OTHERS

DEBIT with:

1. The amount of repairs, on completed repair orders, submitted to the factory for reimbursement under service contract protection plans.

2. All factory receivables not otherwise provided for in the Chart of Accounts.

CREDIT with:

1. Cash or credit amounts received applicable to items in this account.

CAUTION: Adequate subsidiary records must be maintained to substantiate each type of receivable account.


Procedure:

Each account ledger sheet should sufficiently detail all pertinent information.

Each month-end, the individual accounts should be scheduled. A Trial Balance and Analysis of Receivables with Collection Follow-Up sheet should be used. The total of the amounts listed should agree with the general ledger balance in this account.

For a complete explanation of extended service contract plans and procedures consult the current FCA Service Contracts Guide.

(2/18)


FCA 2-19

CURRENT ASSETS Account 116-H

FACTORY RECEIVABLES: CASH/CONSUMER REBATES

DEBIT with:

1. The amount due from the factory in accordance with Sales/Purchase Incentive Programs applicable to the respective vehicle lines.

CREDIT with:

1. The cash and/or credits received applicable to this account.

CAUTION: Sales/Purchase Incentive Programs should be studied thoroughly to assure proper understanding of the specific programs and all provisions. To do so will facilitate proper accounting whereby earnings are recorded in the current period If more than one Incentive Program is in effect during a specific model year, it is recommended that each program be separately identified and controlled. A separate schedule for each program should be used for this purpose. This account should be used for receivables due from FCA only.

Procedure:

This account represents the Dealer Cash and the Consumer Rebate Programs. Individual subsidiary ledger sheets should reflect all information to document these receivables.

The Dealer Cash Program is a non-objective based dealer incentive paid by FCA.

The Consumer Rebate Program is designed to accommodate the consumer when they select the rebate program. The dealer advances the customer the amount of rebate appropriate to the vehicle model. This amount is then set up in account 116-H as a receivable.

Computation of amounts due and maintenance of subsidiary records should be in accordance with FCA instructions on individual programs. At month-end, the total of open and unpaid items should be reconciled to the balance of this account.


FCA (2/18)


Section 1.01 CASH SALES

DEBIT with:

1. The amount of all cash sales.

CREDIT with:

1. All cash received on such sales.

CAUTION: This is a clearing account for sales made for cash. There should be no month-end balance. If a balance does exist, its source should be determined, and suitable disposition made before preparing the financial statement.

Sales on open account, cash deposits, and cash received to apply on open accounts and notes should not be recorded in this account.

Procedure:

This account is provided for the convenience of self-balancing the Cash Receipts Journal with the various Sales Journals.

This account should be scheduled. All cash items are debited and credited to this account. A good audit trail should be maintained. All balances in this account should be accounted for, and the proper action taken.

This account should always show a zero balance at month-end; therefore, no provision is made in the financial statement for this account.

(2/18)


FCA 2-21


ALLOWANCE FOR DOUBTFUL ACCOUNTS

DEBIT with:

1. The amount of the monthly adjustment

reducing the balance of this account. 2. All receivables determined to be

uncollectible.

CREDIT with:

1. The amount of the monthly adjustment

increasing the balance of this account. 2. The amounts recovered on receivables

previously written off as uncollectible.

CAUTION: This account balance represents potential losses on the total amount of all accounts and notes receivable (except factory receivables) at month-end.

All receivables charged off as being uncollectible (actually written off) should be removed from the subsidiary ledger and retained in a Bad Debt file for future reference. Accounts written off as bad debts should be properly documented detailing the collection effort and the determination of uncollectibility.

The dealer's approval should be obtained on all uncollectible accounts prior to their write-off.

Proper credit investigation and approval may minimize potential bad debt losses.

Procedure:

The balance in this account should be established and adjusted (debit or credit) each month-end to equal the total of the following:

1. Service, parts, vehicle, and leasing receivables over 90 days past due. 2. Service & parts accounts and vehicle receivables construed to be worthless, regardless of their

age (this category should include customer checks returned by the bank). 3. All Deferred Certificates. 4. All "Side Notes" (notes accepted in lieu of cash) on vehicle sales that are financed. 5. All other notes over 90 days past due or otherwise construed to be worthless, regardless of their

age. 6. All employee account balances over 90 days past due, or whose services have been terminated.

The balance may also be established and adjusted at each month-end on a basis determined by past experience.

The offsetting entry for the Allowance for Doubtful Accounts should be made to Bad Debts, Account 378; except for leasing receivables, which should be charged to Bad Debts, Leasing Sub-Account 951-8.

Where accounts are collected by a credit and collection agency, the portion of the account that is retained by such agency should be charged to Legal, Auditing, and Collection Expense, Account 370. The total amount collected should be credited to the individual's account.


FCA

(2/18)


DUE FROM FINANCE AND INSURANCE COMPANIES – CURRENT

DEBIT with:

1. The total amount of finance income and insurance commissions earned on installment contracts and insurance policies sold by the dealership.

CREDIT with:

1. The amount received in settlement of finance income and insurance commissions.

CAUTION: Each individual financing and insurance institution may vary in its dealers' participation and payment plan. Therefore, the income should be calculated and recorded on an individual contract basis at the time the sale is recorded in the vehicle sales journals.

Procedure:

It is recommended that separate general ledger sub-accounts be established for each financing and insurance institution account: Account 119-A, ABC Credit Corporation; Account 119-B, First National Bank; and, Account 119- C, XYZ Insurance Co.

Guaranteed Dealer Reserve Plan Agreement. Program is applicable to new and used car and light truck retail contracts only. The Guaranteed Dealer Reserve feature becomes effective after the customer pays a minimum of three monthly payments to FCA Financial.

FCA Financial retains the right to modify or terminate the Guaranteed Dealer Reserve Program at any time.

Due from Finance and Insurance Companies vary according to the written agreement made with each lending institution.

(2/18)


FCA 2-23

CURRENT ASSETS Accounts 120 and 123

INVENTORY: NEW CARS AND TRUCKS

DEBIT with:

1. The cost of all new cars and trucks

purchased, including: A. Installed optional equipment and

accessories. B. Internal cost, including installation

labor, of dealer-installed options. C. Undercoating, special waxing,

polishing, and two-tone paints. D. Freight, handling, and delivery

charges.

CREDIT with:

1. The inventory value of all new cars and

trucks: A. Sold at retail and fleet. B. Transferred (traded) to other

dealers. C. Placed in demo, lease, rental,

driver education, and/or company service.

2. The internal cost of dealer-removed equipment and accessories.

3. The model year-end stock rebate on vehicles in inventory.

CAUTION: These accounts are used for FCA vehicles only.

Care should be exercised in recording transfers of optional equipment and accessories between vehicles to assure correct billing and costing procedures. Detailing all accessories and options on the New Vehicle Inventory Record. Form DUAS-305, will facilitate these procedures.

Vehicles should be physically inventoried and reconciled each month-end with the account balances.

Field Cars purchased from FCA are not to be charged to these accounts. Such units are sold as used cars to dealers.

Procedure:

Separate accounts are provided for each car line handled by the dealership as indicated below:

#120 CHRYSLER/ FIAT CAR LINES #123 CHRYSLER/FIAT TRUCK LINES

Global Electric Motorcars Charger Durango Fiat 500 Town & Country Ram Pickup Fiat 500 Cabrio 200 Series 4 Dr. Sedan Grand Cherokee Caliber 200 Series Convertible Patriot Challenger Ram Pickup Ram chassis Cab 3500 Avenger 4 Dr. Sedan Wrangler Nitro Sebring 4 Dr. Sedan Wrangler 4 Dr. Journey Sebring Convertible Compass Ram Chassis Cab 4500 300 Series Liberty Ram Chassis Cab 5500 Viper

The Holdback included in the factory invoice should not be included in the inventory value of new vehicles. This amount should be deducted from the vehicle invoice and debited to Factory Receivables - Holdback, Account 116- B (see Account 116-B for additional information).


FCA

(2/18)

CURRENT ASSETS

Account 120 and 123

INVENTORY: NEW CARS AND TRUCKS (Cont’d)

Procedure:

Dealer Group Association Fund charges appearing on factory invoices may include amounts for association advertising as well as other amounts refundable to the dealership from the advertising association. The advertising charges are included as part of the vehicle inventory cost. The other, refundable, amounts should be debited to Other Receivables, Account 114, as a receivable from the advertising association.

All new vehicles should be recorded at the time of purchase (physical receipt in inventory) in the New Vehicle Purchase Journal and on the subsidiary Vehicle Inventory Record, Form DUAS-305. Stock numbers should be assigned new vehicles in numerical sequence;the last seven digits of the VIN number may be used for inventory control.

In all instances where new vehicles are purchased from, sold to, or traded with other direct dealers, they are considered TRANSFERS (and not sales) and should, therefore, be recorded in the New Vehicle Purchase Journal or in a separate Dealer Trade Journal.

New vehicles placed in dealership service (service loaners, rental, lease, driver education, etc.) should be transferred by General Journal entry to the appropriate inventory account. The Vehicle Inventory Record, Form DUAS-305, should be removed from the respective new vehicle inventory and updated with sufficient information reflecting the inventory transfer. (Refer to the various account descriptions for additional information.)

Stock rebates should be handled as outlined in the Factory Receivables–Inventory Rebates, Account 116-F.

Each month-end supporting inventory schedules should be prepared on Monthly Analysis Summary, Form DUAS- 373, and should be in agreement with the general ledger account balance and physical inventory. Any variances should be located, their source determined, and proper disposition made before the financial statement is prepared.

For financial statement purposes the total unit and dollar amounts are reported on Page 1 by car lines handled. The individual unit count by model/vehicle line is reported on Page 3 in the Inventory Analysis Section. This information is best obtained from the month-end inventory schedules.

(2/18)


FCA 2-25

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Account 124

INVENTORY: RECREATIONAL VEHICLES

DEBIT with:

1. The cost of all new motorized recreational vehicles purchased, including:

A. Installed optional equipment and accessories.

B. Internal cost of dealer-installed optional equipment and accessories, special bodies and equipment (including the installation labor).

C. Undercoating, special waxing, polishing and two-tone paints.

D. Freight, handling, and delivery charges.

CREDIT with:

1. The inventory value of new motorized recreational vehicles:

A. Sold B. Transferred to other dealers. C. Placed in demonstrator, lease, rental

and/or company service. 2. The internal cost of dealer-removed

accessories and equipment. 3. The stock rebate allowance on motorized

recreational vehicles in inventory at model year-end.

CAUTION: Care should be exercised in recording transfers of equipment between vehicles, installation of accessories, etc., to assure correct billing and costing procedures. Detailing of all options and accessories on the New Vehicle Inventory Record, Form DUAS-305, will facilitate these procedures. Motorized Recreational Vehicles should be physically inventoried each month-end and reconciled with the balance in this account.

Procedure:

All new motorized vehicles should be recorded at the time of purchase (physical receipt in inventory) in the New Vehicle Purchase Journal and on the subsidiary New Vehicle Inventory Record, Form DUAS-305.

Stock numbers should be assigned in numerical sequence also may use the last seven digits of the VIN number for inventory control.

New motorized recreational vehicles placed in dealership service (lease, company, etc.) should be transferred by General Journal entry to the appropriate inventory account. The New Vehicle Inventory Record, Form DUAS-305, should be pulled from the new vehicle inventory and updated with sufficient information reflecting the inventory transfer. (Refer to the various account descriptions for additional information.)

In all instances where new vehicles are purchased from, sold to, or traded with other direct dealers, they are considered TRANSFERS and should, therefore, be recorded in the New Vehicle Purchase Journal or a Dealer Trade Journal.

Stock rebates should be handled as outlined in the Factory Receivables–Inventory Rebates account.

Each month-end this account balance should be in agreement with the total of a detailed schedule prepared on a Monthly Analysis Summary, Form DUAS-373. Any variances should be located, their source determined, and disposition made before the financial statement is prepared.

(2/18)


FCA 2-27


INVENTORY: OTHER NEW CARS AND TRUCKS – COMPETITIVE

DEBIT with:

1. The total cost of all new cars and trucks

purchased from other manufacturers, including:

A. Optional equipment and accessories.

B. Freight, handling and delivery charges.

C. Dealer installed equipment and accessories (including the internal installation labor).

CREDIT with:

1. The inventory value of new cars and

trucks: A. Sold at retail and fleet. B. Transferred to other dealers. C. Placed in company service.

2. The internal cost of dealer removed equipment and accessories.

CAUTION: Care should be exercised when recording transfers of optional equipment and accessories between units to facilitate correct billing and costing procedures.

Vehicles should be physically inventoried each month-end and reconciled with the balance in this account.

DEMONSTRATOR units for these vehicles should remain in this account. The vehicle inventory record card should be properly annotated for such units.

Procedure:

All new vehicles should be recorded at the time of purchase (physical receipt in inventory) in the New Vehicle Purchase Journal and on the subsidiary New Vehicle Inventory Record, Form DUAS-305.

Stock numbers should be assigned new vehicles in numerical sequence also may use the last seven digits of the VIN number for inventory control.

Each month-end a supporting inventory schedule should be prepared on the Monthly Analysis Summary, Form DUAS-373. Any variances should be located, their source determined, and proper disposition made before the financial statement is prepared.

In all instances where new vehicles are purchased from, sold to, or traded with other direct dealers, they are considered TRANSFERS and should, therefore, be recorded in the New Vehicle Purchase Journal or a Dealer Trade Journal.


FCA

(2/18)


INVENTORY: DEMONSTRATORS

DEBIT with:

1. The inventory value of new Chrysler vehicles placed in demonstrator service.

CREDIT with:

1. The inventory value of all demonstrators sold or otherwise removed.

2. Special factory allowances. 3. Equipment and accessories removed.

CAUTION: This account should be used only for Chrysler vehicle lines for which the dealer has a sales agreement.

Demonstrators include those vehicles temporarily placed in service, but primarily held for resale.

This account should not include vehicle line demonstrators, courtesy cars, service vehicles, lease vehicles, driver training vehicles, or executive (company) cars owned by the company. Factory field cars are sold as used cars. When used as demonstrators, they should continue to be classified as used cars and should not be transferred to the demonstrator inventory account.

Procedure:

Vehicles should be physically inventoried periodically and always at month-end. Demonstrator inventory values should be reviewed periodically and any decline should be charged to Demonstration Expense, Account 312.

The Vehicle Inventory Record for each vehicle placed in demonstrator service should be properly annotated and filed in a Demonstrator Inventory File.

The registration, titling, and licensing of demonstrators should be handled in compliance with respective state laws. When placed into demonstrator service they should be handled as inventory transfers. They should not be recorded as a new car sale until sold to the ultimate consumer.

Each month-end the subsidiary Vehicle Inventory Record balances should be scheduled on the Monthly Analysis Summary, Form DUAS-373. The total of all units listed should be in agreement with the total amount of this account.

Should consult with a tax advisor to keep demo agreements, records, etc. for proper income inclusion for these

(2/18)


FCA 2-29


INVENTORY: USED CARS

DEBIT with:

1. The estimated wholesale value (less

estimated reconditioning costs) of used cars:

A. Taken in trade B. Purchased C. Repossessed

2. The internal labor and material amounts to recondition vehicles in inventory.

3. The compensation (fees) of used car buyers (if they are not dealership personnel).

CREDIT with:

1. The inventory value (including

reconditioning costs) of used cars: A. Sold B. Transferred to company use C. Junked or scrapped

2. Any write-down of unit values.

CAUTION: Each used car should be appraised and placed in inventory at the current estimated wholesale value (less estimated reconditioning costs), its trade-in amount, or purchase price, whichever is lower. Used and repossessed vehicles must be retailed, wholesaled, or sold as "junk" in the same price market in which they are inventoried. The disposition of these units should be decided at the time they are purchased or accepted in trade.

It is recommended that used cars be appraised each month-end. Used cars should be physically inventoried each month-end, reconciled with the inventory records and the balance in this account.

Procedure:

It is recommended that a subsidiary Used Vehicle Inventory Record, Form DUAS-305, be prepared for each vehicle, as received.

The amount of the over allowance to the customer in excess of the inventory valuation on used vehicles taken in trade on new or used unit sales should be charged to the "Overallowance" account applicable to the vehicle being sold.

Repossessed cars should be placed in inventory at the current estimated wholesale value (less estimated reconditioning costs). Any amount paid above the current wholesale value should be charged direct to the appropriate new or used "Repossessed Vehicle Losses" account. Subsequent write-downs, if any, should then be charged to the Used Car Inventory–Write-Down account.

Reconditioning cost should be carefully estimated when the unit is accepted. Proper preparation of the Used Vehicle Appraisal, Form DUAS-453, at the time the unit is appraised, will aid in determining what reconditioning is required and its relative costs.

Actual reconditioning costs of each unit should be compared with the estimated reconditioning cost made at the time of the original appraisal. Large variances should be reviewed by the dealer with the used car manager, the appraiser, and the service manager or used car reconditioning manager.

If used cars are not sold but retained in inventory and used in the regular dealership activities as:

1. "Loaners" or courtesy cars for service customers, potential new or used car customers, and employees. 2. Transportation for picking up parts and supplies. 3. Source of supply for used parts.


FCA

(2/18)


INVENTORY: USED CARS (Cont’d)

Procedure:

It is recommended that they be reclassified and accounted for in the following manner: 1. Units used as "loaners" or courtesy cars should be charged to Company Cars and Service Vehicles, Account

164. 2. Units used for picking up parts and supplies should also be charged to Company Cars and Service Vehicles,

Account 164.

Several states require the use of a "Used Vehicle–Police Book." Some of these states recognize and will accept the Used Vehicle Inventory Record, Form DUAS-305, as sufficient record of used vehicle purchases and sales, if and when they are properly maintained.

NOTE: Due to various state and local laws governing insurances, taxes, etc., it is recommended that legal,

tax, and insurance advice be obtained regarding used vehicles.

At each month-end this account balance should be in agreement with a detailed schedule, (prepare a Monthly Used Vehicle Analysis sheet) of used cars on hand taken from the subsidiary Used Vehicle Inventory Records, Form DUAS-305.

The unit and dollar amounts shown on the financial statement for Used Car Inventories should represent only those units that are currently available for sale to retail customers, wholesale buyers, or junk dealers. All other units and amounts should be reclassified as recommended.

(2/18)


FCA 2-31


INVENTORY: USED TRUCKS

DEBIT with:

1. The estimated wholesale value (less estimated

reconditioning costs) of used trucks and motorized recreational vehicles:

A. Taken in Trade B. Purchased C. Repossessed

2. The internal amount of labor materials to recondition vehicles in inventory.

3. The compensation (fees) of used truck buyers (if they are not dealership personnel).

CREDIT with:

1. The inventory value (including reconditioning

costs) of used trucks and motorized recreational vehicles:

A. Sold B. Transferred to company use C. Junked or scrapped

2. Any write-down of unit values.

CAUTION: Each used truck and motorized recreational vehicle should be appraised and placed in inventory at the current estimated wholesale value (less estimated reconditioning costs), its trade-in amount, or purchase price, whichever is lower. Used and repossessed vehicles must be retailed, wholesaled, or sold as "junk" in the same price market in which they are inventoried. The disposition of these units should be decided at the time they are purchased or accepted in trade.

It is recommended that used trucks and motorized recreational vehicles be appraised each month-end.

Used trucks and motorized recreational vehicles should be physically inventoried each month-end, reconciled with the inventory records, and the balance in this account.

Procedure:

It is recommended that a subsidiary Used Vehicle Inventory Record, Form DUAS-305, be prepared for each vehicle, as received. Repossessed trucks and motorized recreational vehicles should be placed in inventory at the current estimated wholesale value (less estimated reconditioning costs). The amount paid, if any, above the current wholesale value should be charged directly to the appropriate new or used "Repossessed Vehicle Losses" account. Subsequent write-down, if any, should then be charged to the Used Truck Inventory–Write-Down account. The amount of the over allowance to the customer in excess of the inventory valuation on used vehicles taken in trade on new or used unit sales should be charged to the "Over allowance" account applicable to the related vehicle sale. Refer to Account 128 regarding the recommended methods and classifications of used trucks and motorized recreation vehicles used in regular dealership activities as:

1. Loaners or courtesy cars. 2. Transportation for picking up parts and supplies. 3. Source of supply for used parts.

Several states require the use of a "Used Vehicle–Police Book." Some of these states recognize and will accept the Used Vehicle Inventory Record, Form DUAS-305, as sufficient record of used vehicle purchases and sales, if and when they are properly maintained.

NOTE: Due to various state and local laws governing insurance, taxes, etc., it is recommended that legal, tax, and insurance advice be obtained regarding used vehicles.

At each month-end this account balance should be in agreement with a detailed schedule, (prepare a Monthly Used Vehicle Analysis sheet) of used trucks and motorized recreational vehicles on hand taken from the subsidiary Used Vehicle Inventory Records, Form DUAS-305. The unit and dollar amounts shown on the financial statement for Used Truck Inventories and motorized recreational vehicles should represent only those units that are currently available for sale to retail customers, wholesale buyers, or junk dealers. All other units and amounts should be reclassified as recommended.


FCA

(2/18)


INVENTORY: CERTIFIED PRE OWNED VEHICLES (CPOV)

DEBIT with:

1. The estimated wholesale value (less estimated reconditioning costs) of CPOV vehicles:

A. Taken in trade B. Purchased C. Repossessed

2. The internal labor and materials to recondition vehicles in inventory.

3. The compensation (fees) of used vehicle buyers (if they are not dealership personnel).

CREDIT with:

1. The inventory value (including reconditioning costs) of used vehicles:

A. Sold B. Transferred to company use C. Junked or scrapped

2. Any write down of unit values.

CAUTION: Each used vehicle should be appraised and placed in inventory at the current estimated wholesale value (less estimated reconditioning costs) or the purchase price, whichever is lower. Used vehicles must be retailed, or wholesaled, in the same price market in which they are inventoried.

It is recommended that used vehicles be appraised each month-end. Used vehicles should be physically inventoried each month-end, reconciled with the inventory records and balance in this account. This account is to used by Five Star Dealers only.

Procedure:

It is recommended that a subsidiary CPOV Vehicle Inventory Record, Form DUAS-305, be prepared for each vehicle, as received.

Repossessed CPOV vehicles should be placed in inventory at the current estimated wholesale value (less estimated reconditioning costs). The amount paid, if any, above the current wholesale value should be charged directly to the appropriate new or used "Repossessed Vehicle Losses" account. Subsequent write-down, if any, should then be charged to the CPOV Vehicle Inventory – Write-Down account.

The amount of the over allowance to the customer in excess of the inventory valuation on used vehicles taken in trade on new or used unit sales should be charged to the "Over allowance" account applicable to the related vehicle sale.

Refer to Account 127 & 128 regarding the recommended methods and classifications of used cars & trucks and motorized recreation vehicles used in regular dealership activities as:

1. Loaners or courtesy cars. 2. Transportation for picking up parts and supplies. 3. Source of supply for used parts.

(2/18)


FCA 2-33A


INVENTORY: CERTIFIED PRE OWNED VEHICLES (CPOV) cont’d

Several states require the use of a "Used Vehicle–Police Book." Some of these states recognize and will accept the CPOV Vehicle Inventory Record, Form DUAS-305, as sufficient record of CPOV vehicle purchases and sales, if and when they are properly maintained.

NOTE: Due to various state and local laws governing insurance, taxes, etc., it is recommended that legal, tax,

and insurance advice be obtained regarding used vehicles.

At each month-end this account balance should be in agreement with a detailed schedule of CPOV vehicles on hand taken from the subsidiary CPOV Vehicle Inventory Records, Form DUAS-305.

The unit and dollar amounts shown on the financial statement for CPOV vehicle Inventories should represent only those units that are currently available for sale to retail customers, wholesale buyers, or junk dealers. All other units and amounts should be reclassified as recommended.

2-33B DEALER UNIFORM ACCOUNTING SYSTEM

FCA

(2/18)


INVENTORY: PARTS AND ACCESSORIES – CHRYSLER

DEBIT with:

1. The cost of all parts and accessories purchased from FCA.

2. The increase in book value for parts and accessories on hand as disclosed by physical count.

3. Cost of accessories removed from vehicles and placed in inventory.

4. The cost of all nuts, bolts, clips, washers, etc. Price tape appreciation adjustments needed for L.I.F.O. purposes.

CREDIT with:

The cost of all parts and accessories sold. 1. The decrease in book value for parts and

accessories on hand as disclosed by physical count.

2. The write-off at cost of all obsolete and scrapped parts and accessories removed from the bins.

3. The "Core Credit" recovered on Warranty Service Claims where remanufactured assemblies have been installed.

4. Parts returned for credit under the new Cycle Return program. Price tape depreciation adjustments needed for L.I.F.O. purposes.

CAUTION: Discounts earned on the quantity of parts and accessories purchased should not affect this account but should be credited directly to Purchase Discounts–Parts and Accessories, Account 585-E. Transportation charges should be debited to Freight, Express, and Shipping, Account 355.

Parts and accessories should be individually costed at Dealer price (a percentage method of costing is not recommended). Dealer prices are direct purchase prices as published in the FCA Master Parts Price List. MOPAR Multi-Purpose Line Price Bulletin, and Accessory Price List. Care should be exercised when costing accessories sold since they may be purchased and inventoried at any one of a number of Dealer prices.

Procedure: Accessories removed from new vehicles and placed in the inventory should be handled as outlined below:

A. Factory Installed accessories should be removed from the New Vehicle inventory for the amount shown on

the factory vehicle invoice. B. Dealer installed accessories should be removed from the New Vehicle Inventory for the same internal

amount originally charged for such accessories. C. Factory and Dealer Installed accessories should be placed in the Accessories Inventory at their direct

purchase price (Dealer Price). Differences between the direct purchase prices and installed prices should be charged to New Vehicle Inventory Maintenance, Account 303. Book in at price tape cost parts purchased from the outside and showing difference in stock order discounts account. Also parts return should be booked in immediately at gross when return occurs, not when credit advice is recorded.

It is recommended that a sub-account be established and maintained for nuts, bolts, clips, washers, etc., to aid in controlling the numerous small items of this nature.

The offsetting entry for obsolete and scrapped parts and accessories should be to Inventory Adjustments–Parts and Accessories, Account 132. Subsidiary inventory records should be maintained to assure purchases in quantities sufficient to obtain maximum discounts, minimize shrinkage losses, and avoid an unbalanced stock.

It is recommended a full cycle counts to cover inventory four times a year, also need a monthly reconciliation between parts and accounting

Accounting procedures for Wholesale Allowance and the Parts Return Allowance Plans are detailed in Account 116-E and Account 116-F, respectively.

(2/18)


FCA 2-34


INVENTORY: PARTS AND ACCESSORIES - OTHER MANUFACTURERS

DEBIT with:

1. The cost of all parts and accessories purchased from other manufacturers.

2. The increase in book value for parts and accessories on hand as disclosed by physical count.

3. Cost of accessories removed from vehicles and placed in inventory.

4. The cost of all nuts, bolts, clips, washers, etc.

CREDIT with:

1. The cost of all parts and accessories sold. 2. The decrease in book value for parts and

accessories on hand as disclosed by physical count.

3. The write-off at cost of all obsolete and scrapped parts and accessories removed from the bins.

4. The "Core Credit" recovered on Warranty Service Claims where remanufactured assemblies have been installed.

CAUTION: Discounts earned on the quantity of parts and accessories purchased should not affect this account but should be credited directly to Purchase Discounts–Parts and Accessories, Account 585-E. Transportation charges should be debited to Freight, Express, and Shipping, Account 355.

Parts and accessories should be individually costed at Dealer price (a percentage method of costing is not recommended). Dealer prices are direct purchase prices as published in the Other Manufacturer's Master Price List. Care should be exercised when costing accessories sold since they may be purchased and inventoried at any one of a number of Dealer prices.

Procedure:

Accessories removed from new vehicles and placed in the inventory should be handled as outlined below: A. Factory installed accessories should be removed from the New Vehicle Inventory for the amount shown on

the factory vehicle invoice. B. Dealer installed accessories should be removed from the New Vehicle Inventory for the same internal amount originally charged for such accessories. C. Factory and Dealer installed accessories should be placed in the Accessories Inventory at their direct

purchase price (Dealer Price). Differences between the direct purchase prices and installed prices should be charged to New Vehicle Inventory Maintenance, Account 303.

It is recommended that a sub-account be established and maintained for nuts, bolts, clips, washers, etc., to aid in controlling the numerous small items of this nature.

The offsetting entry for obsolete and scrapped parts and accessories should be to Inventory Adjustments–Parts and Accessories, Account 132.

Subsidiary inventory records should be maintained to assure purchases in quantities sufficient to obtain maximum discounts, minimize shrinkage losses, and avoid an unbalanced stock.

IT IS RECOMMENDED THAT PARTS AND ACCESSORIES ON HAND BE VERIFIED BY A PHYSICAL INVENTORY AT LEAST ONCE EACH YEAR AND MORE OFTEN, IF NECESSARY.


FCA

(2/18)


INVENTORY ADJUSTMENTS - PARTS AND ACCESSORIES

DEBIT with:

1. The amount of the write-off of obsolete and scrapped parts and accessories.

2. The amount required to decrease the inventory book value to agree with the combined total of the parts and accessories physical inventory.

CREDIT with:

1. The monthly provision for anticipated inventory losses and obsolescence.

2. The adjustment required to increase the inventory book value to agree with the physical inventory.

CAUTION: This account makes provision for shrinkage and obsolescence of parts and accessories on hand.

Procedure:

There are various ways and methods of establishing allowances for shrinkage and obsolescence. The following are some of the more widely used methods:

1. A fixed amount based on previous experience factors. 2. A percentage of the inventories. 3. A fixed amount monthly. 4. A percentage of purchases. 5. A percentage of sales–at cost. 6. Estimating the difference between book value and physical count value, then amortizing the difference

monthly.

The preferred method is Number 1 above. However, if no experience factor exists, it is recommended that a fixed percentage (ranging from 1/2% to 1%) of each month-end book inventory value be accrued as shrinkage and obsolescence allowance.

NOTE: The offsetting entry should be to Parts and Accessories–Inventory Adjustments, Account 587-G.

(2/18)


FCA 2-36


INVENTORY: TIRES AND TUBES

DEBIT with:

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.

CREDIT with:

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.

CAUTION: Cost of sales of tires and tubes should be determined for each sale.

A physical inventory should be taken each month-end and reconciled with the balance in this account.

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

Procedure:

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 recorded on the Monthly Analysis Summary, Form DUAS-373. Any difference between the book value and the physical inventory value, should be debited or credited to Cost of Sales–Tires and Tubes, Account 590-C.


FCA

(2/18)


OTHER AUTOMOTIVE INVENTORIES

DEBIT with:

1. The cost of both new and used: A. Snowplows B. Fifth Wheels C. Winches and power take-offs D. Campers (Bodies) E. Special truck bodies F. Power lift/tail gates G. Other related items when

purchased as units separate and apart from vehicles.

2. The cost of any of the above units placed in demonstrator service (apart from vehicles).

3. The cost of maintaining inventory.

CREDIT with:

1. The inventory value of items contained in this account when sold, or otherwise removed.

2. The write-down of inventory value based on reappraisal of used units.

3. The write-off of inventory maintenance to current expense.

CAUTION: A physical inventory should be taken each month-end and reconciled with the balance in this account.

Procedure:

In all instances where new units are purchased from, sold to, or traded with other direct dealers, they are considered TRANSFERS and should, therefore, be recorded in the New Vehicle Purchase Journal or Dealer Trade Journal.

It is recommended that a stock number be assigned each item upon receipt and an individual inventory record be maintained on the Vehicle Inventory Record, Form DUAS-305. This procedure will also provide a sale and gross profit record of all units.

Each month-end, subsidiary inventory records should be scheduled on a Monthly Analysis Summary, Form DUAS- 373. This schedule should be in agreement with the physical inventory and general ledger account balance. Any variances should be located, their source determined, and proper disposition made before the financial statement is prepared.

Seek tax advice or consult your CPA for the proper information.

(2/18)


FCA 2-38


LABOR IN PROCESS – MECHANICAL

DEBIT with:

1. The cost of all productive mechanical labor performed by:

A. Mechanics, B. Mechanics helpers and apprentices, C. Salaried personnel (service salesmen

on repair orders. 2. The adjustment required when the physical

inventory is greater than the account balance.

CREDIT with:

1. The cost of all mechanical labor sold on completed repair orders.

2. The adjustment required when the physical

inventory is less than the account balance.

CAUTION: The amount of money paid to flagged technicians that has not yet been recovered by the processing of the repair orders that they were paid on and work performed. NOTE: unless it is paid to the technician, it is not work in process.

Costing and inventory procedures should be carefully reviewed, periodically, to preclude unwarranted "build-up" of this asset and possible losses at future date.

Procedure:

Compensation to mechanics for vacations, holidays, etc., should not be charged to this account. All such time-off compensation to service technicians should be charged to Vacation and Time-off Pay Expense, Account 341-A.

A Daily Time and Job Ticket, Form DUAS-139, should be used to control all productive technicians' labor. When used properly, it will reflect the technician's total time, whether charged to this account as productive labor or directly to operations as expense (refer to Forms, Section 9, for additional information).

Each month-end, this account balance should be in agreement with a physical inventory of incompleted mechanical repair orders; prepare a Month-End Inventory of Incompleted Repair Orders, Form DUAS-391. Any variance between the general ledger account balance and the detailed inventory list should be located, the source determined and proper disposition made before the financial statement is prepared. Minimal differences which are not promptly resolved should be debited or credited to Unapplied/Variance Labor, Account 559-D.

When mechanics are employed on an "hourly" or "guaranteed basis", the amount paid, if any, in excess of their productive earnings should be charged directly to Unapplied Variance Labor, Account 559-D.

When an individual is employed in a productive and utility capacity, i.e., porter, used car maintenance, etc., his productive labor costs should be charged to this account. The utility time should be charged to the appropriate expense account.


FCA

(2/18)


LABOR IN PROCESS – BODY AND PAINT

DEBIT with:

1. The cost of all productive body and paint labor performed by:

A. Body & paint technicians, B. Helpers and apprentices, C. Salaried personnel (managers,

foremen, estimators, etc.) 2. The adjustment required when the physical

inventory is greater than the account balance.

CREDIT with:

1. The cost of all body shop labor sold on completed repair orders.

2. The adjustment required when the physical inventory is less than the account balance.

CAUTION: This account balance represents the cost of all productive body and paint labor on repair orders in process at month-end. Labor which has been performed but which has not been billed as a sale due to incomplete work, etc., is an asset and should be recognized as such each month-end.

Costing and inventory procedures should be carefully reviewed, periodically, to preclude unwarranted "build-up" of this asset and possible losses at a future date.

Procedure:

Compensation to productive body shop employees for vacations, holidays, etc., should not be charged to this account. All such time-off compensation to body and paint technicians should be charged to Vacation and Time-off Pay Expense, Account 341-B.

A Daily Time and Job Ticket, Form DUAS-139, should be used to control all productive technicians' labor. When used properly, it will reflect the technician's total time, whether charged to this account as productive labor or directly to operations as expense (refer to Forms, Section 9, for additional information).

Each month-end, this account balance should be in agreement with a physical inventory of incompleted body shop repair orders; prepare a Month-End Inventory of Incompleted Repair Orders, Form DUAS-391. Any variance between the general ledger account balance and the detailed inventory list should be located, the source determined and proper disposition made before the financial statement is prepared. Minimal differences which are not promptly resolved should be debited or credited to Unapplied/Variance Labor, Account 567-D.

When body shop technicians are employed on an "hourly" or "guaranteed basis," the amount paid, if any, in excess of their productive earnings should be charged directly to Unapplied/Variance Labor, Account 567-D.

When an individual is employed in a productive and utility capacity, i.e., porter, used car maintenance, etc., his productive labor costs should be charged to this account. The utility time should be charged to the appropriate expense account.

(2/18)


FCA 2-40


OTHER SERVICE AND PARTS INVENTORIES: GAS, OIL, AND LUBRICANTS

DEBIT with:

1. The cost of gas, oil, and lubricants purchased, including:

A. Brake Fluid D. Fabric Guard B. Antifreeze E. Paint Sealants C. Solvents, etc. F. Undercoating New

Vehicles 2. The adjustment required when the physical

inventory is greater than the account (book) balance.

CREDIT with:

1. The inventory value of gasoline, oil, and lubricants sold or used internally.

2. The inventory value of brake fluid, antifreeze, solvents, etc. sold or used internally.

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

CAUTION: Close inventory control of this account is recommended to minimize shrinkage and other losses.

Fuel oil purchased for heating purposes should not be charged to this account, but should be charged to Prepaid Expenses–Other, Account 145-F.

Procedure:

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 Cost of Sales–Gas, Oil, and Lubricants, Account 558-C.

Inventories should be priced in accordance with the latest cost prices available–at the lower of cost or market value. Unless costing of materials sold or used is accurate, sizeable adjustments will be necessary at month-end to adjust the account balance to the physical inventory total value.

Various materials are sold and costed in different ways. Some are sold by the pound while others are sold by the pint, quart, or gallon. Costing methods and prices should be reviewed periodically to permit costing of material sold and dispensed to be as accurate as possible.

Containers of material other than those being currently used should be kept in the parts department, when possible, to afford greater protection against losses.

It is recommended that the Monthly Summary, Form DUAS-373, be used to list the physical inventory items.

The balance in this account should be combined with the balances in Accounts 136-B and C to arrive at a total value for financial statement reporting or combined with or included in parts inventory if not material.


FCA

(2/18)


OTHER SERVICE AND PARTS INVENTORIES: BODY SHOP MATERIALS

DEBIT with:

1. The cost of body, paint and undercoat materials purchased.

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

3. The cost of rubbing compounds, upholstery cleaner, etc., purchased.

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

CREDIT with:

1. The inventory value of body, paint and undercoat 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.

CAUTION: 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.

Procedure:

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–Body and Paint Shop Materials, Account 566-C.

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

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.

It is recommended that the Monthly Analysis Summary, Form DUAS-373, be used to list the physical inventory items.

The balance in this account should be combined with the balances in Accounts 136-A and C to arrive at a total value for financial statement reporting.

(2/18)


FCA 2-42


OTHER SERVICE AND PARTS INVENTORIES: SUBLET WORK

DEBIT with:

1. The cost of all sublet work purchased.

CREDIT with:

1. The cost of all sublet work sold.

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

This account includes sublet work for mechanical and body and paint repairs, however, 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 the dealership Service Department.

Procedure:

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 repair order and/or internally on an 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 charging out all sublet work to the proper sources.

It is recommended that a memo detail list of all sublet purchases be maintained as an aid in costing sublet work and preparing the month-end inventory schedule.

Each month-end, a schedule should be prepared on Month-End Inventory of Incompleted Repair Orders, Form DUAS-391, listing the cost of each unsold sublet repair. Any difference between the total of this inventory schedule and the account balance should be located and proper disposition made.

The balance in this account should be combined with the balances in Accounts 136-A and B to arrive at a total value for financial statement reporting.


FCA

(2/18)


NON-AUTOMOTIVE INVENTORIES

DEBIT with:

1. The cost of both new and used: A. Tractors and farm implements B. House, boat, utility, and camp trailers C. Boats and marine engines D. Motorcycles and bikes E. Golf carts F. Snow-Mobiles G. Industrial engines H. Appliances, etc. (major appliances) I. Livestock (accepted in trade) J. Miscellaneous related properties

acquired and temporarily held for resale. 2. The cost of any of the above units placed in

demonstrator service. 3. Cost of labor and material for reconditioning used

tractors, boats, motorcycles, etc.

CREDIT with:

1. The inventory value of merchandise sold or otherwise removed.

2. The write-down of inventory value based on reappraisal of used units

CAUTION: A physical inventory should be taken each month-end and reconciled with the balance in this account.

Procedure:

A separate subsidiary inventory record for each unit should be prepared at the time of acquisition; listing the stock number, description, optional equipment, and unit cost. It is recommended that the Vehicle Inventory Record, Form DUAS-305, be used as the subsidiary inventory record for individual units carried in this account.

All new units should be recorded at the time of purchase in the New Vehicle Purchase Journal.

In all instances where new units are purchased from, sold to, or traded with other direct dealers, they are considered TRANSFERS and should, therefore, be recorded in the New Vehicle Purchase Journal.

Stock numbers should be assigned each unit in numerical sequence.

Each month-end, supporting inventory schedules should be prepared on a Monthly Analysis Summary, Form DUAS-373, and should be in agreement with the balance in this account. Any variances should be located, their source determined and proper disposition made before the financial statement is prepared.

Dealerships engaged in the sale of tractors and farm implements, trailer homes and specialty trailers boats and marine engines, appliances, etc. on a large scale, may find it advantageous to form a subsidiary company and accounting system. It is recommended that the dealer consult legal and tax counsel regarding the advantages, if any, of subsidiary or separate companies.

(2/18)


FCA 2-44


MARKETABLE SECURITIES

DEBIT with:

1. The cost, including brokerage fees, of securities purchased.

2. The cost or market value, whichever is lower, of securities accepted in trade.

CREDIT with:

1. The cost of securities sold. 2. The disposal of worthless securities.

CAUTION: This account is for stocks, bonds, and other securities that are readily convertible into cash.

Investments in subsidiaries or affiliates should not be included in this account. Such investments should be charged to Other Assets and Investments, Account 157.

Procedure:

Supporting information on all transactions should be maintained. This includes date acquired, cost, complete description, date sold, proceeds, and gain or loss on disposal.

1. Cost represents the total amount paid, including commissions, taxes and other fees. 2. Proceeds represent the net amount received–that is, the gross amount of the sale less

commissions, taxes, transfer cost, and other fees.

A schedule of income should be maintained for each marketable security held.

All interest and dividends earned should be credited to Other Income–Interest Earned, Account 603.

Profits resulting from a sale should be credited to Other Income–Gain on Disposal of Capital Assets, Account 608; losses should be debited to Other Deductions–Loss on Disposal of Capital Assets, Account 708.


FCA

(2/18)


PREPAID EXPENSES: ADVERTISING

DEBIT with:

1. The cost of all advertising paid in advance which is applicable to future periods.

CREDIT with:

1. The monthly write-off of prepaid advertising to current expense.

CAUTION: Do not include advertising billed on factory vehicle invoices in this account.

Procedure:

Examples of prepaid advertising included in this account are: A. Theatre contracts that span several months. B. Advance payments for auto show exhibit space. C. Security deposits on advertising contracts. D. Billboard advertising. E. All other prepaid advertising.

A schedule should be maintained detailing each item charged to this account. This schedule should identify the period benefited by each advertising charge and should be used in computing the monthly allocation to the various advertising expense accounts. The balance of the schedule should agree with the balance in this account each month-end. Prepaid and Accrued Accounts Schedule, Form DUAS-355, should be used for this purpose.

The Standard Entries Journal, Form DUAS-185, should be used to record the monthly write-off of prepaid advertising.

The balance in this account should be combined with the balances in Accounts 145-B, C, D, E, and F to arrive at a total value for financial statement reporting.

(2/18)


FCA 2-46


PREPAID EXPENSES: INSURANCE

DEBIT with:

1. All prepaid insurance premiums and/or deposits that extend beyond the current month.

CREDIT with:

1. The monthly write-off of prepaid insurance premiums to current expense.

2. Advance deposits when applied in settlement of premiums.

CAUTION: It is advisable to carry sufficient insurance coverage to give protection for investments in inventories, personal, and real properties, as well as to furnish protection against liability risks.

Deposit premiums, such as Workmen's Compensation, etc., should be debited to this account and should remain intact for the term of the insurance coverage or until the final disposition of the annual premium is determined.

Procedure:

A schedule should be maintained on the Prepaid and Accrued Insurance Schedule, Form DUAS-361, fully describing each insurance policy in force. The balance as shown in the schedule should agree with the balance in the account each month-end.

The entries to record the monthly write-off of prepaid insurance premiums should be recorded in the Standard Entries Journal, Form DUAS-185.

It is advisable to retain all insurance policies in a "fire-proof" safe or vault.

The balance in this account should be combined with the balances in Accounts 145-A, C, D, E, and F to arrive at a total value for financial statement reporting.


FCA

(2/18)


PREPAID EXPENSES: INTEREST

DEBIT with:

1. Interest paid in advance beyond the current month on:

A. Notes, B. Demonstrator finance contracts, C. Equipment finance contracts, etc.

CREDIT with:

1. The monthly write-off of prepaid interest to current expense.

2. Refunds of interest charged to this account.

Procedure:

A schedule of each note and contract on which prepaid interest exists should be accurately and currently maintained on the Prepaid and Accrued Accounts Schedule, Form DUAS-355. The balance as shown on the schedule should agree with the balance in the account each month-end.

The entry to record the monthly write-off of prepaid interest should be recorded in the Standard Entries Journal, Form DUAS-185.

The balance in this account should be combined with the balances in Accounts 145-A, B, D, E, and F to arrive at a total value for financial statement reporting.

(2/18)


FCA 2-48

CURRENT ASSETS Account 145-D

PREPAID EXPENSES: RENT

DEBIT with:

1. Rent paid in advance of the current month. 2. Lease security deposits.

CREDIT with:

1. Rent applicable to the current month. 2. Lease security deposits refunded or expired.

CAUTION: It is recommended that legal and accounting services be obtained when entering into lease negotiations and agreements.

Procedure:

It is recommended that lease security deposits as well as prepaid monthly rent be appropriately detailed on the Prepaid and Accrued Accounts Schedule, Form DUAS-355. The balance shown on this schedule should agree with the balance in the account each month-end.

The Standard Entries Journal, Form DUAS-185, should be used to record the monthly expense portion of prepaid rent.

Lease security deposits normally remain intact until the expiration of the lease, and are usually used as the last month's rent.

The balance in this account should be combined with the balances in Accounts 145-A, B, C, E, and F to arrive at a total value for financial statement reporting.


FCA

(2/18)

CURRENT ASSETS Account 145-E

PREPAID EXPENSES: TAXES AND LICENSES

DEBIT with:

1. Taxes and licenses prepaid for periods beyond the current month.

CREDIT with:

1. The monthly write-off of taxes and licenses to current expense.

CAUTION: The prepayment of taxes and licenses should be allocated to expense over the applicable period.

Procedure:

Taxes and licenses applicable to the current month should not be charged to this account, but should be charged direct to expense. Examples of some items chargeable to this account are:

A. Real and Personal Property Taxes B. Franchise Tax C. Occupational Licenses D. Retail Business Licenses E. Demonstrator Vehicle Licenses F. Customers temporary vehicle licenses G. Vehicle safety inspection stickers H. Etc.

Temporary vehicle licenses for customers may be set up in this account if charged to the customer, or may be charged to Taxes and Licenses, Account 390 (refer to description of Account 390).

Some states require periodic vehicle safety inspections wherein a sticker must be affixed to the vehicle. These stickers, usually purchased in bulk from the state, should be set up in this account. As inspections are performed, the amount charged the customer for the sticker should be credited to this account as a direct relief of the prepaid stickers. The inspection amount charged the customer should be handled as a regular customer labor sale.

All prepaid taxes and licenses should be listed in detail on the Prepaid and Accrued Accounts Schedule, Form DUAS-355. The balance shown on this schedule should agree with the balance in the account each month-end.

The Standard Entries Journal, Form DUAS-185, should be used to record the monthly write-off of the amount to be expensed.

The balance in this account should be combined with the balances in Accounts 145-A, B, C, D, and F to arrive at a total value for financial statement reporting.

(2/18)


FCA 2-50


PREPAID EXPENSES: OTHER

DEBIT with:

1. All prepaid expenses related to Lease and Rental Vehicles.

2. All prepaid items not otherwise classified in the Chart of Accounts.

3. Miscellaneous items purchased in large quantities for future use.

CREDIT with:

1. The monthly write-off of all items in the account to current expenses.

2. The amounts submitted to the factory as a claim for payment, or otherwise recovered.

CAUTION: Legal and/or tax counsel should be obtained pertaining to the proper handling of corporate organization expenses.

Procedure:

Charges to this account may include such items as: A. Fuel B. Corporate organization expense, the application of which extends beyond the current month. C. Excess pension-trust-fund payments (refer to description of Account 217-C). D. Licenses, taxes, insurance, interest, etc., pertaining to the dealership's lease and rental operation. This

would include prepaids for vehicles as well as any other prepaid expenses related to this operation. E. Road ready and the full tank of gas credits are to be booked as factory receivables and prepaid other upon

receipt of a new vehicle at the dealership.

Prepaids on lease and rental vehicles are generally for pre-computed interest, insurance, licenses, and taxes which have no current negotiable value. They are carried as assets and offset against revenue as it is earned. Prepaid balances should be computed on each individual lease and rental vehicle in service, as well as the overall operation.

Items such as stationery and office supplies (invoices, repair orders, postage, shop supplies, equipment service contracts, etc.) are normally expensed at the time of purchase; however, when purchases are made in lot quantities (for extended periods of time) these expenses should be set up as a prepaid item and prorated over the estimated period.

All prepaid expenses should be listed in detail on the Prepaid and Accrued Accounts Schedule, Form DUAS-355, indicating the applicable period and the monthly allocation to expense. The Standard Entries Journal, Form DUAS- 185, should be used to record the monthly write-off of the amount to be expensed.

The balance in this account should be combined with the balances in Accounts 145-A, B, C, D, and E to arrive at a total value for financial statement reporting.


FCA

(2/18)

OTHER ASSETS Account 151

OFFICERS’ AND EMPLOYEES’ ACCOUNTS

DEBIT with:

1. Open account purchases by officers and employees.

2. Loans made to officers and employees.

CREDIT with:

1. Payments received on account. 2. Credits issued and applicable to this account. 3. Cash discounts allowed for prompt payment of

account. 4. The amounts determined to be uncollectible.

CAUTION: Withdrawals by a sole proprietor or a partner should not be included in this account, They should be charged to Withdrawals, Account 285.

Advances on salesmen's commissions, and other earnings, should not be included in this account. They should be charged to Accrued Payroll, Account 210-A.

Close control should be exercised in the handling of this account so as to conserve working capital.

Procedure:

Individual account charges and loans should be properly recorded on individual subsidiary records.

Each month-end, individual account balances should be scheduled on a Trial Balance and Analysis of Receivables with Collection Follow-Up sheet. The total of the amounts listed should agree with the subsidiary records and the balance in this account.

(2/18)


FCA 2-52


DUE FROM FINANCE AND INSURANCE COMPANIES – DEFERRED

DEBIT with:

1. The amount of finance reserve and insurance commissions credited to the dealers' account, which is being held (deferred) to apply against contingent repossession losses and customer prepayments.

CREDIT with:

1. The amount of finance reserves and insurance commissions charged-back (forfeited) due to:

A. Repossessions B. Contract prepayments

2. The portion of finance reserve and insurance commissions that become free of any contingencies.

CAUTION: Each individual financing and insurance institution may vary in its dealers' participation and payment plan. Therefore, the income should be calculated and recorded on an individual contract basis at the time of sale in the vehicle sales journals.

Procedure:

Due From Finance and Insurance Companies–Deferred includes such items as:

1. That portion representing the "retention amount" of the outstanding finance liability as specified in the retail financing agreement.

2. "Special" or "Hold" reserves.

The dealership should obtain a statement from each financing and insurance institution (preferably monthly, but at least quarterly) that indicates in detail each interim charge and credit since the last statement rendered.

The portion of finance reserve and insurance commissions that become free of any contingencies should be transferred to Due From Finance and Insurance Companies–Current, Account 119. For additional information see instructions in Account 119.


FCA

(2/18)


DEPOSITS ON CONTRACTS

DEBIT with:

1. Deposits made on utility accounts. 2. Performance guarantee deposits on contracts.

CREDIT with:

1. Returned or forfeited deposits.

CAUTION: Deposits for prepaid advertising, insurance, and rent should not be recorded in this account. These deposits should be recorded in their respective prepaid accounts (see Accounts 145-A, B, or C) together with the applicable prepaid expense.

Procedure:

Include deposits on performance guarantees such as bids bonds, city, county, and state performance bonds, etc.

Receipts representing various types of deposits should be carefully filed for ready reference.

It is recommended that the general ledger account be identified with the source of payment; check number, receipt number, date, person's name issuing the receipt, and other pertinent information.

(2/18)


FCA 2-54


CASH VALUE OF LIFE INSURANCE

DEBIT with:

1. The cash surrender value of all life insurance policies of which the dealership is owner and beneficiary.

2. The increase in cash surrender value upon payment or recording of additional premium.

3. Accrued insurance dividends and interest.

CREDIT with:

1. The cash received at the time the policy is: A. Surrendered B. Cancelled

CAUTION: The increase in cash surrender value may not necessarily coincide with the date premium is due, in which case, the entire premium should be charged to the expense account and adjusted by journal entry at the time the cash surrender value would increase.

Procedure:

The cash surrender value of life insurance represents the cash the company could get from the insurance company by surrendering the policy. The amount of premiums in excess of the increase in cash surrender values of life insurance policies should be debited to Miscellaneous Deductions, Account 709.

Cash surrender values, and premium separation, may be obtained from the life insurance policy or the insurance agency.

It is recommended that a listing of all insurance policies indicating the policy number, agency, and insurance company be currently maintained and filed for immediate reference.

All insurance policies should be properly safeguarded. It is advisable to retain all insurance policies in a "fire-proof" safe or vault.


FCA

(2/18)

OTHER ASSETS Account 155-A

DRIVER EDUCATION VEHICLES

DEBIT with:

1. The cost of all units placed in driver education service.

2. The cost of dealer installed optional equipment and accessories including installation labor.

CREDIT with:

1. The cost of each vehicle removed from this account.

2. The cost of any optional equipment and accessories removed from vehicles in this account.

CAUTION: Vehicles purchased for Driver Education should be placed in the appropriate New Vehicle Inventory (in the normal manner) until such time as they are prepared for delivery, fully equipped for driver training, and delivered to the school. Then, a General Journal entry should be made to transfer the unit from New Vehicle inventory to this account.

Procedure:

Under the provisions of the FCA Driver Education Program currently in effect, eligible vehicles may be loaned, leased, or sold to non-profit educational/religious organizations.

The following procedures provide a uniform method for recording the type of transaction involved.

Loaned: Transfer vehicle from New Vehicle inventory to this account. Leased: Transfer vehicle from New Vehicle inventory to Lease/Rental Vehicles, Account 156-A. Direct Sale: Record as a regular new vehicle sale.

DRIVER EDUCATION ALLOWANCES When filing the application forms for factory allowances/refunds pertaining to the Driver Education Program, the dealership should debit Factory Receivables–Other, Account 116-G. The offsetting credit would be to Account 155- B (if vehicle is loaned); Account 156-B (if vehicle is leased); or the appropriate vehicle line Cost of Sales account (if vehicle is sold).

DRIVER EDUCATION EXPENSES All related expenses incurred by the dealership, which are not covered by allowances/refunds from the factory, or which are not paid by the school involved, should be expensed by debiting Advertising–General and Institutional, Account 367 (Refer to the description of that account for additional information.).

The balance in this account represents the cost of all units placed in Driver Education service and should be combined with the balance in Account 155-B to arrive at a net value for financial statement reporting.

(2/18)


FCA 2-56

OTHER ASSETS Account 155-B

DEPRECIATION AND PROGRAM ALLOWANCES: DRIVER EDUCATION VEHICLES

DEBIT with:

1. The accumulated program allowances and depreciation on each vehicle transferred or sold from Account 155-A.

CREDIT with:

1. Any eligible program allowances earned by each vehicle in Account 155-A.

2. Monthly provision for the depreciation on eligible vehicles in Account 155-A.

Procedure:

Upon delivery of an eligible unit to the school, the monthly depreciation rate should be determined. A standard Journal entry should be made each month, at the computed amounts, for the period of time the vehicle is in service. Depreciation should be credited to this account with the offsetting debit to Advertising–General and Institutional, Account 367.

NOTE: The Decal Allowances should not be credited to this account. Refer to Account 155-A for further

information on the proper accounting for program allowances.

The balance in this account represents the total program allowances and depreciation applicable to vehicles in Account 155-A and should be combined with the balance in that account to arrive at a net value for financial statement reporting.


FCA

(2/18)

OTHER ASSETS Account 156-A

LEASE/RENTAL VEHICLES

DEBIT with:

1. The cost of all vehicles placed in: A. Long-term lease service B. Courtesy Transportation

Vehicle Program (CPT) C. Daily-rental service

2. The cost of dealer installed optional equipment and accessories (including installation labor).

CREDIT with:

1. The cost of optional equipment and accessories removed from vehicles.

2. The total cost of vehicles when removed from this account.

CAUTION: The use of this account is intended for those dealerships engaged in leasing or renting vehicles on a supplemental basis (including revenue producing vehicles such as daily rental vehicles to service customers).

Dealerships engaged in this activity on a large scale should consider establishing a separate leasing business, with an accounting system designed specifically for that type of business. CTP vehicles should be reported in this account as well, with monthly depreciation charged to Sub-Account 156B (not shown on financial statement), netted against Account 156A, with the resulting book value represented in Account 156A on the FCA Financial Statement. A schedule of all Lease/Rental vehicles should be maintained showing original cost, depreciation, and net book value.

Procedure:

Regardless of the number of units placed in lease or rental service, it is recommended that legal, accounting, and tax advice be obtained.

Vehicles purchased for lease or rental service should be placed in the appropriate New Vehicle Inventory (in the normal manner) until they are fully prepared for delivery/service. Then, a General Journal entry should be made to transfer the unit from New Vehicle inventory to this account.

Courtesy Transportation Program (CTP) All vehicles leased or owned under this program should be included in this account and the corresponding liability for leased units should be set up in Account 256 – Other Liabilities, Lease/Rental vehicles. Insurance and interest charges should be charged to Account 715 – Vehicle Lease/Rental Expense. DRIVER EDUCATION PROGRAMS Only vehicles leased to driver education schools should be included in this account.

Article II. PROGRAM ALLOWANCES Any program allowances (above-listed programs or other sources), earned by vehicles in this account, should be credited to Account 156-B with the offsetting debit to Factory Receivables–Other, Account 116-G; or Other Receivables, Account 114, for other make vehicles.

For Financial Statement Reporting: The balance in this account should be combined with the balance in Account 156-B to arrive at a net asset value. The total units in service would also be reported on the asset side of Page 1. In addition, provision is made in the Current Earnings section, Lines 57 through 69, for each month's units placed in service. Rental units are reported separately. Lease units are combined with units for Retail Leasing–Sales, Account 448.

(2/18)


FCA 2-58

OTHER ASSETS Account 156-B

DEPRECIATION AND PROGRAM ALLOWANCES: LEASE/RENTAL VEHICLES

DEBIT with:

1. The accumulated depreciation on each vehicle transferred or removed from lease/rental service.

2. The accumulated program allowances earned on each vehicle transferred or removed from lease/rental service.

CREDIT with:

1. The monthly charge for depreciation of lease and rental vehicles.

2. Any eligible program allowances applicable at the time.

Procedure:

Rates of depreciation vary according to the type of vehicle, and the provisions of the lease/rental agreement. It is recommended that the dealer obtain legal, accounting, and tax counsel for proper compliance with various legal and tax regulations.

The offsetting debit for depreciation expense should be made to Depreciation–Sub-Account 928-8.

The offsetting debit for eligible program allowances should be to Factory Receivables–Other, Account 116-G, or Other Receivables, Account 114, for other make vehicles.

The balance in this account represents the total of accumulated depreciation and program allowances applicable to vehicles in lease/rental service and should be combined with the balance in Account 156-A to arrive at a net value for financial statement reporting.


FCA

(2/18)


OTHER ASSETS AND INVESTMENTS

DEBIT with:

1. The investment (at cost) in subsidiary or affiliated companies.

2. The investments (at cost) in real and personal property not used in the automobile business.

CREDIT with:

1. The cost of assets represented in this account when sold.

2. The cost of assets represented in this account when placed in use or service in the automobile business.

CAUTION: This is a control account and should be supported by subsidiary records.

Circumstances may dictate the need for professional tax and legal counsel regarding items in this account.

Stocks, bonds, and other marketable securities which are readily convertible into cash should not be included in this account. They should be charged to Marketable Securities, Account 140.

Procedure:

Detailed subsidiary ledgers, or schedules, should be maintained setting forth the nature and current status of each type of asset and investment.

The total of all subsidiary ledger accounts, or the schedule balance, should agree with the balance in this account each month-end.

All operating income earned or losses incurred on these assets should be recorded in Miscellaneous Income, Account 609, or Miscellaneous Deductions, Account 709, respectively.

Any interest or dividends earned on these investments should be credited to Interest Earned, Account 603.

Any gain or loss resulting from the sale of the investment should be credited or debited to Gain/Loss on Disposal of Capital Assets, Accounts 608 or 708, respectively.

(2/18)


FCA 2-60

LAND, BUILDINGS AND EQUIPMENT Account

LAND 160

DEBIT with:

1. The cost of land purchased for use in the automobile business.

2. The cost of legal fees, recording fees, broker's commissions, and abstract and title fees to secure title.

3. The cost of surveys.

CREDIT with:

1. The total cost of land when sold.

CAUTION: This account represents the cost of land for use in the dealership activity.

Land not used in the automobile business should be included in Other Assets and Investments, Account 157.

This is a control account which should be supported by a subsidiary record.

Procedure:

All land purchased should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS- 367. The accumulated total in the "Cost Column" should agree with the balance in this account each month-end.

When land and buildings are purchased for a lump sum, an appraisal should be made to determine the value of the land. The determined value of the land and the building(s) should be charged to the appropriate accounts.

Depreciable improvements, such as grading, paving, ditches, sewers, landscaping, etc., should be charged to a sub-account under Buildings and Building Equipment, Account 161-A.


FCA

(2/18)

LAND, BUILDINGS AND EQUIPMENT Account 161-A

BUILDINGS AND BUILDING EQUIPMENT

DEBIT with:

1. The costs of building(s) purchased or constructed for use in the automobile business.

2. The cost of improvements, alterations, additions, and permanent fixtures attached to the building(s).

3. The amount of legal fees, architect fees, excavating and grading cost, etc.

CREDIT with:

1. The costs of buildings or building fixtures sold or otherwise removed from this account.

CAUTION: Buildings and improvements on leased land should be recorded in Leaseholds, Account 166-A. Buildings and improvements not used in the dealership activity should be recorded in Other Assets and Investments, Account 157.


Procedure:

The cost of land and buildings purchased for a lump sum should be allocated to the appropriate accounts based on an appraisal, tax assessment, or other acceptable basis.

All buildings, building equipment, and improvements should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The accumulated total in the "Cost Column" should agree with the balance in this account each month-end.

Depreciable land improvements, such as grading, paving, etc., should be charged to this account. For control purposes a sub-account or separate fixed asset record may be maintained for these improvements.

Repairs and maintenance costs which ordinarily do not increase the value or prolong the life of buildings and/or permanent fixtures and equipment should be expensed as they occur. (See Maintenance and Repairs–Real Estate, Account 387.)

When a building or equipment included in this account is sold, the total cost should be credited to this account. Accumulated depreciation for the building and/or equipment should be charged to Depreciation of Buildings and Building Equipment, Account 161-B. Any gain on the sale should be credited to Gain on Disposal of Capital Assets, Account 608. Any loss on the sale should be debited to Loss on Disposal of Capital Assets, Account 708.

This account should be combined with Account 161-B to arrive at the net value for financial statement purposes.

(2/18)


FCA 2-62

LAND, BUILDINGS AND EQUIPMENT Account 161-B

DEPRECIATION OF BUILDINGS AND BUILDING EQUIPMENT

DEBIT with:

1. The accumulated depreciation on building(s) and building equipment when sold or otherwise removed from this account.

CREDIT with:

1. The monthly provision for depreciation on buildings, building equipment and improvements.

CAUTION: This is a control account that should be supported by a subsidiary record.

This account represents the total accumulated depreciation of buildings, building equipment, and improvements recorded in Buildings and Building Equipment, Account 161-A.

Procedure:

Rates of depreciation vary according to the type of building and equipment, use, and other factors. It is recommended that the dealer obtain outside accounting and tax counsel to aid him in determining proper depreciation rates.

All buildings, building equipment, and improvements should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The total in the "Accumulated Reserve Column–December 31st," plus the accumulated current year-to-date amount should agree with the balance in this account each month-end.

This account should be combined with Account 161-A to arrive at the net value for financial statement purposes.


FCA

(2/18)


SERVICE EQUIPMENT

DEBIT with:

1. The cost of machinery and equipment put chased or built (not a permanent part of the building).

2. The costs of Special Model Year Tools.

CREDIT with:

1. The cost of machinery and equipment in the account that is sold or otherwise removed.

CAUTION: This account balance represents the net purchase price, freight, and installation costs of all machinery, permanent tools, and equipment purchased or built (including lease-purchase arrangements).

Parts and Accessories Department equipment should not be charged to this account.

This is a control account that should be supported by a subsidiary record. A periodic physical inventory of service equipment should be made, due to the sizeable investment involved.

Procedure:

All service equipment acquired should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The accumulated total in the "Cost Column" should agree with the balance in this account each month-end. A separate fixed asset record maintained for mechanical and body shop equipment will afford better internal control and distribution of costs.

Small tools of an expendable nature should be charged directly to expense.

Repairs to items in this account should be charged directly to expense as they occur.

SPECIAL MODEL YEAR TOOLS Special Model Year Tools whether purchased as new or used, should be charged to this account and depreciated over their useful life.

BASIC TOOLS Basic Tools, such as wheel pullers, drivers, expanders, certain type specialty wrenches, truck tools, etc., when purchased should not be construed as current model year "special tools." The cost of these tools normally is a sizeable amount. Whether they are purchased as new or used, they should be charged to this account. These tools should then be depreciated over the remaining life expectancy of the tools.

When equipment included in this account is sold, the cost should be credited to this account. Accumulated depreciation for the equipment sold should be debited to Depreciation of Service Equipment, Account 162-B. Any gain on the sale should be credited to Gain on Disposal of Capital Assets, Account 608. Any loss on the sale should be debited to Loss on Disposal of Capital Assets, Account 708.


(2/18)


FCA 2-64


DEPRECIATION OF SERVICE EQUIPMENT

DEBIT with:

1. The accumulated depreciation on service machinery and equipment when sold or otherwise removed.

CREDIT with:

1. The monthly provision for depreciation on service machinery and equipment.

CAUTION: This is a control account that should be supported by a subsidiary record.

This account balance represents the total accumulated depreciation of service machinery and equipment recorded in Service Equipment, Account 162-A.

Procedure:

Rates of depreciation vary according to the type of equipment, use, and other factors. It is recommended that the dealer obtain outside accounting and tax counsel to aid him in determining proper depreciation rates.

All service machinery, equipment, special model year tools, and basic tools should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The total in the "Accumulated Reserve Column– December 31st," plus the accumulated current year-to-date amount should agree with the balance in this account each month-end.



FCA

(2/18)


PARTS AND ACCESSORIES EQUIPMENT

DEBIT with:

1. The cost of all equipment acquired, purchased or constructed (not a permanent part of the building).

CREDIT with:

1. The cost of equipment in this account that is sold or otherwise removed.

CAUTION: This account balance represents the net purchase price, freight, and installation costs of all equipment purchased or built (including lease-purchase arrangements).

Service Department equipment should not be charged to this account.

This is a control account which should be supported by a subsidiary record. A periodic physical inventory of equipment should be made, due to the sizeable investment involved.

Procedure:

Equipment for use in the Parts and Accessories Department includes such items as:

A. Parts bins and racks B. Show cases and counters C. Cabinets and containers, etc.

All parts and accessories equipment acquired should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The accumulated total in the "Cost Column" should agree with the balance in this account each month-end.

Repairs to items in this account should be charged directly to expense as they occur.

When equipment included in this account is sold, the cost should be credited to this account. Accumulated depreciation for the equipment sold should be debited to Depreciation of Parts and Accessories Equipment, Account 163-B. Any gain on the sale should be credited to Gain on Disposal of Capital Assets, Account 608. Any loss on the sale should be debited to Loss on Disposal of Capital Assets, Account 708.


(2/18)


FCA 2-66


DEPRECIATION OF PARTS AND ACCESSORIES EQUIPMENT

DEBIT with:

1. The accumulated depreciation on parts and accessories equipment when sold or otherwise removed.

CREDIT with:

1. The monthly provision for depreciation on parts and accessories equipment.

CAUTION: This is a control account which should be supported by a subsidiary record.

This account balance represents the total accumulated depreciation of parts and accessories equipment recorded in Parts and Accessories Equipment, Account 163-A.

Procedure:

Rates of depreciation vary according to the type of equipment, use, and other factors. It is recommended that the dealer obtain outside accounting and tax counsel to aid him in determining proper depreciation rates.

All parts and accessories equipment should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The total in the "Accumulated Reserve Column–December 31st," plus the accumulated current year-to-date amount should agree with the balance in this account each month-end.



FCA

(2/18)


COMPANY CARS AND SERVICE VEHICLES

DEBIT with:

1. The cost of all new and used vehicles including accessories and equipment permanently placed in company service.

CREDIT with:

1. The cost of all such vehicles when sold, or otherwise removed.

CAUTION: This account should not include cars assigned to or used by company officials. Such units should be classified as demonstrators.

This is a control account which should be supported by a subsidiary record. Company cars and service vehicles should be physically inventoried periodically and stringent controls placed on their use.

The balance in this account represents the cost of all vehicles acquired by the dealership for use in the

Procedure:

This account should include such vehicles as: A. Service and parts trucks B. Wreckers C. Motorcycles D. Courtesy cars (excluding vehicles which are primarily revenue producing, such as daily rental

vehicles to service customers. If an occasional customer is charged a nominal amount, with no contractual obligations, this should not be considered as primarily revenue producing.)

E. Airplanes, etc. (used in the dealership's regular activities).

All company cars and service vehicles acquired or transferred from another vehicle inventory should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The accumulated total in the "Cost Column" should agree with the balance in this account each month-end.

The costs of licenses, insurance, interest, and ordinary maintenance should be charged to the applicable expense accounts.

When a company car or service vehicle is sold, the cost should be credited to this account. Accumulated depreciation for each unit sold should be debited to Depreciation of Company Cars and Service Vehicles, Account 164-B. Any gain on the sale should be credited to Gain on Disposal of Capital Assets, Account 608. Any loss on the sale should be debited to Loss on Disposal of Capital Assets, Account 708.


(2/18)


FCA 2-68


DEPRECIATION OF COMPANY CARS AND SERVICE VEHICLES

DEBIT with:

1. The accumulated depreciation on company cars and service vehicles when sold, or otherwise removed.

CREDIT with:

1. The monthly provision for depreciation on all company cars and service vehicles.


This account balance represents the total accumulated depreciation of company cars and service vehicles recorded in Company Cars and Service Vehicles, Account 164-A.

Procedure:

It is recommended that the dealer obtain accounting and tax counsel to aid him in determining proper depreciation rates.

All company cars and service vehicles should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The total in the "Accumulated Reserve Column–December 31st," plus the accumulated current year-to-date amount should agree with the balance in this account each month-end.



FCA

(2/18)


FURNITURE, SIGNS, AND EQUIPMENT

DEBIT with:

1. The cost of all furniture, signs, and equipment, and permanent indoor and outdoor signs.

CREDIT with:

1. The cost of all furniture, signs and equipment sold, or otherwise removed.

CAUTION: This account balance represents the purchase price, freight, and installation costs of all furniture, signs, and equipment acquired for dealership use.

It is recommended that dealerships occupying leased facilities obtain legal and tax advice regarding capitalization of assets permanently affixed to such facilities.

This is a control account which should be supported by a subsidiary record. These assets should be physically inventoried periodically.

Procedure:

All furniture, signs, and equipment should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The accumulated total in the "Cost Column" should agree with the balance in this account each month-end.

Repairs and maintenance costs which ordinarily do not add to the value or prolong the life of the furniture, signs, and equipment should be charged to expense as they occur.

When furniture, signs, and equipment included in this account are sold, the cost should be credited to this account. Accumulated depreciation for the equipment sold should be debited to Depreciation of Furniture, Signs, and Equipment, Account 165-B. Any gain on the sale should be credited to Gain on Disposal of Capital Assets, Account 608. Any loss on the sale should be debited to Loss on Disposal of Capital Assets, Account 708.


(2/18)


FCA 2-70


DEPRECIATION OF FURNITURE, SIGNS, AND EQUIPMENT

DEBIT with:

1. The accumulated depreciation on furniture, signs, and equipment when sold, or otherwise removed.

CREDIT with:

1. The monthly provision for depreciation on all furniture, signs, and equipment.


This account balance represents the total accumulated depreciation of furniture, signs, and equipment recorded in Furniture, Signs, and Equipment, Account 165-A.

Procedure:

It is recommended that the dealer obtain accounting and tax counsel to aid him in determining proper depreciation rates.

All furniture, signs, and equipment should be listed in detail on the Fixed Asset–lnventory and Depreciation Record, Form DUAS-367. The total in the "Accumulated Reserve Column–December 31st," plus the accumulated current year-to-date amount should agree with the balance in this account each month-end.



FCA

(2/18)

LAND, BUILDINGS AND EQUIPMENT Account

LEASEHOLDS 166-A

DEBIT with:

1. The purchase price of a lease. 2. The cost of improvements made on leased

property. 3. The cost of existing improvements

acquired on leased property. 4. The premium paid for a lease.

CREDIT with:

1. The cost of leaseholds and improvements sold or abandoned.


Lease security deposits should not be recorded in this account. They should be entered in Prepaid Rent, Account 145-D.

Procedure:

All leaseholds should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The accumulated total in the "Cost-Column" should agree with the balance in this account each month-end.

Repairs and maintenance costs which ordinarily do not add to the value of the leaseholds should be expensed as they occur.

Leasehold improvements are normally construed to mean those improvements of a permanent nature that add value and/or life to the property.

When leaseholds are sold, the cost should be credited to this account. Accumulated amortization for the leasehold sold should be debited to Amortization of Leaseholds, Account 166-B. Any gain on the sale should be credited to Gain on Disposal of Capital Assets, Account 608. Any loss on the sale should be debited to Loss on Disposal of Capital Assets, Account 708.


(2/18)


FCA 2-72


AMORTIZATION OF LEASEHOLDS

DEBIT with:

1. The accumulated amortization on leaseholds and improvements upon sale, disposal, or lease termination.

CREDIT with:

1. The monthly provision for amortization on all leaseholds and improvements.

CAUTION: It is recommended that the dealer obtain accounting and tax counsel in establishing proper accounting and amortization of leaseholds.

This account balance represents the total accumulated amortization of leaseholds and improvements recorded in Leaseholds, Account 166-A.


Procedure:

Leasehold improvements should be amortized over the expected life of the improvement, or the remaining period of the lease, whichever is less.

A premium paid for a lease should be amortized over the term of the lease.

All leaseholds and improvements should be listed in detail on the Fixed Asset–Inventory and Depreciation Record, Form DUAS-367. The total in the "Accumulated Reserve Column-December 31st," plus the accumulated current year-to-date amount should agree with the balance in this account each month-end.



FCA

(2/18)

CURRENT LIABILITIES Account 201-A

ACCOUNTS PAYABLE: TRADE CREDITORS

DEBIT with:

1. Payments made on open accounts, including cash discounts taken.

2. Credit memos received from vendors. 3. Parts returned for credit under the new cycle return

program.

CREDIT with:

1. Liabilities incurred for merchandise, equipment (including lease/purchase items), and services purchased on open account.

CAUTION: Equipment lease/purchase contracts having a note attached should be recorded in Account 203 or 265, whichever is applicable.

The use of voucher envelopes is recommended for greater accounting flexibility. Refer to Accounts Payable Voucher Envelope, Form DUAS-325.

Procedure:


The balance in this account represents the total amount due to trade creditors for the purchase of material, equipment, and services on open account.

It is recommended that purchase orders be properly used authorizing all purchases. Purchase orders should be issued only by authorized persons.

Vendor invoices should be matched with the related purchase orders, cross referenced, and attached prior to being recorded and filed in the Accounts Payable Voucher Envelope.

A trial balance of the subsidiary accounts payable records should be prepared each month-end. The total should agree with the balance in this account. It is recommended that Monthly Analysis Summary, Form DUAS-373, be used for this purpose.

The balance in this account should be combined with the balances in Accounts 201-B, C, and D to arrive at a total value for financial statement reporting.

(2/18)


FCA 3-1

CURRENT LIABILITIES Account 201-C

ACCOUNTS PAYABLE: MISCELLANEOUS EMPLOYEE DEDUCTIONS

DEBIT with:

1. Payments made to appropriate agencies. 2. Transfers of payroll deductions for employee's

portion of applicable expenses (contributory plans).

CREDIT with:

1. The amount of deductions from employees' earnings for: A. Hospital and medical premiums B. Life insurance premiums C. Pension plan contributions D. Uniform and laundry services E. Union dues F. Charitable contributions G. Savings bonds H. Wage Garnishments I. Etc.

CAUTION: DO NOT INCLUDE PAYROLL TAX DEDUCTIONS or, OPEN ACCOUNT COLLECTIONS in this account.

The balance in this account represents the liability to others, for deductions from compensation of all officers and employees.

Procedure:

This is a control account. Detailed subsidiary records must be maintained to support each employee's contribution to the various vendor/suppliers.

Payroll deductions for items such as uniform and laundry service, which may be credited to an expense account, are controlled more effectively if credited to this account, analyzed by employee, and credited to the respective expense accounts, after being properly accounted and documented.

All payroll deductions must be authorized, in writing, by the individual employee. Authorization forms are normally furnished by the organization for which the deduction is being made.

Contributory plans–are those plans in which both the dealership and the participating employees make contributions. Such plans include pension, retirement, and hospitalization. Legal and accounting advice should be obtained on all questions related to contributory plans.

The balance in this account should be combined with the balances in Accounts 201-A, B, and D to arrive at a total value for financial statement reporting.


FCA

(2/18)

CURRENT LIABILITIES Account 201-D

ACCOUNTS PAYABLE: OTHER

DEBIT with:

1. Payments made to subsidiary companies for open account purchases,

2. Credit memos issued by subsidiary companies,

3. The amount of the dealership's check to the finance institution for customer installment payments made at the dealership (See NOTE below).

CREDIT with:

1. All purchases on open account from subsidiary companies.

2. The amount of customer installment payments collected for finance institutions (See NOTE below).

CAUTION: This account should be used for all accounts payable for which a specific account has not been provided, such as: dealer-controlled leasing, finance, and insurance subsidiaries; installment contract collections from customers; etc.

Procedure:

Each entry should be clearly defined, well documented, and supported by a subsidiary record.

NOTE: Installment collections should be paid immediately to protect the customer's credit rating and to avoid potential "late charges."

These collections represent the dealership's liability for customer payments made to the dealership on finance installment contracts held by finance institutions.

Remittances should be made daily. (Refer to Account 102 for additional information.)

At month-end individual account balances should be listed on Monthly Analysis Summary, Form DUAS-373. The total of the amounts listed should agree with the balance in this account. At month-end a schedule is generated with all the open balances.

The balance in this account should be combined with the balances in Accounts 201-A, B, and C to arrive at a total value for financial statement reporting.

(2/18)


FCA 3-3

CURRENT LIABILITIES Account 202

CUSTOMER REFUNDS - PAYABLE

DEBIT with:

1. Payments made to defaulting customers.

CREDIT with:

1. The amount of the surplus due a defaulting customer as computed on line 25 of the Record of Repossessed Vehicle Sale, Form DUAS 500.

CAUTION: By law a dealership is required to refund any surplus remaining upon the disposition of a repossessed vehicle. The determination of amount, the promptness of payment and responsibilities of the dealership are outlined in Section 8-Repossession Procedures- of this Manual.

Procedure:

This account is to be used EXCLUSIVELY for the purpose outlined above.

Refer to Customer Repossession Refund, Account 478-E and Section 8-Repossession Procedures- for further details.


FCA

(2/18)

CURRENT LIABILITIES Account

NOTES PAYABLE 203

DEBIT with:

1. The amount of payments made on notes recorded in this account.

CREDIT with:

1. The principal amount of short-term: A. Loans B. Equipment lease/purchase contracts C. Notes from officers, proprietors,

partners, etc. D. Life insurance loans.

CAUTION: The balance in this account represents the amount due on short-term notes payable; either secured or unsecured. Short-term notes mature within one year.

Notes on vehicle finance liability should not be recorded in this account.

Procedure:

A subsidiary record should be maintained indicating details of each loan and/or contract.

Each month-end individual items should be listed on Monthly Analysis Summary, Form DUAS-373. The total of the amounts listed should agree with the balance in this account.

The liability for interest on these notes should be recorded in Accrued Expenses–Interest, Account 212.

(2/18)


FCA 3-5


DIVIDENDS PAYABLE

DEBIT with:

1. The amount of dividends paid to stockholders.

CREDIT with:

1. The amount of dividends declared and payable.

CAUTION: This account should be used only by corporations.

Procedure:

The balance in this account represents unpaid dividends declared by the Board of Directors.

It is recommended that the Monthly Analysis Summary, Form DUAS-373, be used for any necessary schedules.


FCA

(2/18)


ACCOUNTS PAYABLE: VEHICLE LIEN PAYOFFS

DEBIT with:

1. The amount of payment made to satisfy the encumbrances against the vehicles.

CREDIT with:

1. The amount of encumbrances on vehicles: A. Purchased B. Accepted in trade C. Repossessed

CAUTION: These encumbrances (liens) should be paid immediately to obtain clear title to the vehicle, and protect the customer's credit rating.

This account should be used as a clearing account for amounts due finance institutions, credit unions, etc. on vehicles purchased, accepted in trade, or repossessed.

Procedure:

When securing the pay-off on any unit, it is important to ascertain that the quoted amount is the "NET" amount (gross balance due, less maximum rebates for interest and insurance).

Each month-end the open balances should be scheduled on Monthly Analysis Summary, Form DUAS-373. The total of the amounts listed on the schedule should agree with the balance in this account.

(2/18)


FCA 3-7


VEHICLE PROTECTION/EXTENDED WARRANTY PAYABLE

DEBIT with:

1. Payments made of FCA Corporation under Service Contract Plans.

2. Payments made to others for extended vehicle warranties.

CREDIT with:

1. The amount due FCA for Service Contracts.

2. The amount due to others for extended warranties.

CAUTION: Immediately after the sale of the protection to the retail customer, the necessary documentation and registration fee should be mailed in conformity with the requirements of the plan.


FCA

(2/18)


ACCRUED PAYROLL AND EQUIVALENT: SALARIES, WAGES, COMMISSIONS, BONUSES & PROFIT SHARING

DEBIT with:

1. The reversal of the prior month-end payroll accrual.

CREDIT with:

1. The monthly accrual for gross salaries, wages, commissions, and incentives earned from the ending date of the last payroll period to the month-end.

CAUTION: The balance in this account represents the amount of salaries, wages, commissions, incentives, bonuses, and profit sharing earned in the current accounting period which are payable in a subsequent accounting period.

Procedure:

When the end of a pay period does not coincide with the end of a month, the amount of employees' compensation earned but not paid or recorded during the month should be accrued individually by employee and recorded on the Payroll Journal, Form DUAS-177. Promptly at the beginning of the following month, the (previous month's) payroll accrual should be reversed.

Payroll advances and draws are construed as wages at the time of payment. Therefore, it is recommended that such advances and draws be issued on a payroll check.

If desirable, deferred bonuses and profit sharing plans (based on a percentage of profit) may be recorded in a sub- account.

The balance in this account should be combined with the balance in Account 210-B to arrive at a total value for financial statement reporting.

(2/18)


FCA 3-9

CURRENT LIABILITIES Account 210-B

ACCRUED PAYROLL AND EQUIVALENT: VACATION AND TIME OFF PAY

DEBIT with:

1. The amount of vacation, sick-leave, and time-off pay: A. Included in the regular payroll B. Paid separately to employees

2. Adjustments to decrease the accrual balances based on current requirements.

CREDIT with:

1. The monthly provision for: A. Annual vacation pay B. Sick-leave pay C. Time-off pay

2. Adjustments to increase the account balance based on current requirements.

CAUTION: This account is provided for the accrual of vacation, sick-leave, and time-off wages of productive employees whose wages are normally charged to cost of sales. However, if additional expenses will be incurred due to vacations, etc., of other employees, provision should be made for the anticipated expenses.

Procedure:

The balance in this account represents the estimated amount of vacation, sick-leave, and time-off wages earned to date, and which will be paid when taken in a subsequent accounting period.

The monthly accrual should be based upon the dealership's vacation policy, terms of contract, or other agreement with applicable employees.

The estimated expenses of temporarily replacing other employees while on vacation should be accrued at the rate of one-twelfth per month during each month from January through December, if the replacement is made from the outside. If a regular employee is to substitute, and no additional help is employed, the accrual would not be required.

When applicable, vacation pay for commission salesmen should be included in this account.

The balance in this account should be combined with the balance in Account 210-A to arrive at a total value for financial statement reporting.


FCA

(2/18)


ACCRUED INTEREST

DEBIT with:

1. Payments made on interest-bearing obligation.

2. The reversal of the prior month-end accrual.

CREDIT with:

1. The amount of interest accumulated to date on all interest-bearing notes and contracts.

CAUTION: This account balance represents the amount of interest accrued monthly on all interest-bearing obligations, which is payable in a future accounting period.

Procedure:

Typical interest-bearing obligations for which interest should be recorded in this account include:

A. New and Used Vehicle Inventories B. Mortgages C. Other Automotive Inventories D. Non-Automotive Inventories E. Capital Loans, etc.

It is recommended that the Standard Entries Journal, Form DUAS-185, be used to record accrued interest and the monthly expense charge.

The finance institution handling the wholesale account, interest on floor plan, capital loan, and other loans will bill interest monthly. An accrual must be set-up for one complete month’s worth on interest regardless of the financial institutions billing cycle.

EXAMPLE: Interest billed through the 20th of the month amounts to $1,000. The period to the end of the month = 10 days or $333. However, the Inventory Finance Liability at this month-end is 10% higher than the liability at the previous month-end. The accrual is increased accordingly to $333 + 10% (or $33.30) = total to accrue $366.30.

(2/18)


FCA 3-11


ACCRUED INSURANCE

DEBIT with:

1. Payments of premiums accrued in this account.

2. Any adjustment to reduce the accrual balance to actual liability.

CREDIT with:

1. The monthly accrual for premiums on all insurance coverage.

2. Any adjustment to increase the accrual balance.

CAUTION: The balance in this account represents the total estimated premiums (subject to future determination) covering insurance, for which payment will be made in a future accounting period.

Periodic examination should be made of all insurance policies to assure adequate coverage and eliminate duplicate or unneeded coverage.

Procedure:

Typical insurance coverages that may be accrued in this account include:

A. Vehicle Inventories, Garage Keepers Legal Liability B. Contents C. Workmen's Compensation D. Comprehensive General & Garage Liability based on payroll inventory, etc.

The entry to record the monthly accrual of premiums payable should be recorded in the Standard Entries Journal, Form DUAS-185.

A schedule should be maintained on the Prepaid and Accrued Insurance Schedule, Form DUAS-361, fully describing each insurance policy in force.

The balance as shown in the accrued insurance schedule should agree with the balance in this account each month-end.

It is advisable to retain all insurance policies in a "fire-proof" safe or vault.


FCA

(2/18)


TAXES – PAYROLL: F.I.C.A. WITHHELD AND ACCRUED

DEBIT with:

1. Amounts paid to designated depository banks and/or Federal Reserve Banks.

2. Amounts remitted with calendar quarter F.I.C.A. (Federal Insurance Contributions Act) tax return. Remittance of these funds should be in conformity with F.I.C.A. regulations.

CREDIT with:

1. F.I.C.A. taxes (Social Security) withheld from employees' earnings.

2. Employer's portion of F.I.C.A. tax.

CAUTION: Current applicable tax rates should be used in computing the employee and employer tax liability. Payroll taxes should be paid on or before the required due date to avoid penalties.

Procedure:

The balance in this account represents F.I.C.A. taxes withheld from employees, and the accrued employer portion, which has not yet been paid.

Individual tax deductions should not be made beyond the maximum amount prescribed by the Federal Insurance Contributions Act. Individual employee earnings records should be currently accumulated to facilitate the proper payroll deductions.

It is recommended that individual employee earnings records clearly indicate the maximum taxable levels.

The entry to record the employer's portion of the F.I.C.A. tax should be recorded in the Standard Entries Journal, Form DUAS-185, each month.

When the quarterly F.I.C.A. tax returns are filed, the final quarterly remittance should clear the account balance for the respective calendar quarter. Any differences between the total amount accrued and the amount due should be adjusted through Payroll Taxes Expense, Account 365.

The balance in this account should be combined with the balances in Accounts 214-B, C, D, E, and F to arrive at a total value for financial statement reporting. Reconciliation is completed at month end.

(2/18)


FCA 3-13


TAXES PAYROLL: FEDERAL INCOME TAX WITHHELD

DEBIT with:

1. Tax withholdings paid to designated government agencies.

CREDIT with:

1. Federal Income Tax withheld from employees' earnings.

CAUTION: Payroll taxes should be paid on or before the required due date to avoid penalties.

Procedure:

The balance in this account represents Federal Income Tax Withheld from employees' earnings, which has not yet been remitted to a designated depository bank or governmental agency.

Current applicable tax rates (Tax Tables) should be used in computing the employee withholding tax liability.

Individual employee earnings records should be accurate and maintained on a current basis. Each calendar quarter's total of individual employees' income tax withheld should agree with the total amount withheld as reflected in this account. Any variances should be located, their source determined, and proper disposition promptly made.

The balance in this account should be combined with the balances in Accounts 214-A, C, D, E, and F to arrive at a total value for financial statement reporting. Reconciliation is completed at month-end. Deductions and remittances should be in conformity with regulations of the appropriate governmental agencies.


FCA

(2/18)


TAXES – PAYROLL: FEDERAL UNEMPLOYMENT TAXES

DEBIT with:

1. Amounts paid to the governmental agency for unemployment taxes.

CREDIT with:

1. The monthly accrual for Federal Unemployment Taxes (based on taxable payroll).


Procedure:

The balance in this account represents employers' liability for Federal Unemployment Taxes which have not been remitted to a depository bank or the governmental agency.

Employee earnings records should be currently maintained to facilitate accurate computation of employer payroll tax liability.

Instructions of the taxing authority should be followed in determining the employers' liability and payment of unemployment taxes.

The entry to record tax liability should be recorded in the Standard Entries Journal, Form DUAS-185, each month.

The balance in this account should be combined with the balances in Accounts 214-A, B, D, E, and F to arrive at a total value for financial statement reporting. Reconciliation is completed at month-end.

(2/18)


FCA 3-15


TAXES – PAYROLL: STATE INCOME TAX WITHHELD

DEBIT with:

1. Tax payments to state agencies.

CREDIT with:

1. State Income Tax withheld from employees' earnings.


Procedure:

The balance in this account represents State Income Taxes withheld from employees' earnings, which have not been remitted to a designated depository bank or the state government.

Current applicable tax rates (Tax Tables) should be used in determining the employee withholding tax liability.

Individual employee earnings records should be accurately and currently maintained.

Each month and calendar quarter's total of individual employees' income tax withheld should agree with the total amount withheld as indicated in this general ledger account. Any variances should be located, their source determined, and proper disposition promptly made.

The balance in this account should be combined with the balances in Accounts 214-A, B, C, E, and F to arrive at a total value for financial statement reporting. Reconciliation is completed at month-end.


FCA

(2/18)

CURRENT LIABILITIES Account 214-E

TAXES – PAYROLL: LOCAL (CITY & COUNTY) INCOME TAX WITHHELD

DEBIT with:

1. Amounts paid to local governments.

CREDIT with:

1. Local (city and county) income taxes, withheld from employees' earnings.


Procedure:

The balance in this account represents Local (City and County) Income Taxes withheld from employees' earnings which have not been remitted to the respective government agencies.

Current applicable tax rates (Tax Tables) should be used in determining the employee withholding tax liability.

Individual employee earnings records should be accurately and currently maintained.

Each month and calendar quarter's total of individual employees' income tax withheld should agree with the total amount withheld as indicated in this account. Any variances should be located, their source determined, and proper disposition made.

The balance in this account should be combined with the balances in Accounts 214-A, B, C, D, and F to arrive at a total value for financial statement reporting. Reconciliation is completed at month-end.

(2/18)


FCA 3-17

CURRENT LIABILITIES Account 214-F

TAXES – PAYROLL: STATE UNEMPLOYMENT TAX

DEBIT with:

1. Amounts paid to state agencies for unemployment taxes.

CREDIT with:

1. The monthly accrual for state unemployment taxes.


Procedure:

The balance in this account represents the employer's liability for State Unemployment Taxes which have not been paid.

Employee earnings records should be currently maintained to facilitate accurate computation of employer payroll tax liability.

Instructions of the taxing agency should be followed in determining the liability and payment of unemployment taxes.

The entry to record the tax liability should be recorded in the Standard Entries Journal, Form DUAS-185, each month.

Any variances between the total amount accrued and the amount due should be adjusted through Payroll Taxes Expense, Account 365.

The balance in this account should be combined with the balances in Accounts 214-A, B, C, D, and E to arrive at a total value for financial statement reporting.


FCA

(2/18)


TAXES – OTHER THAN PAYROLL AND INCOME: SALES AND USE TAX – VEHICLES

DEBIT with:

1. Payments made to local and state agencies for sales tax collected.

CREDIT with:

1. The amount of sales tax collected from customers' vehicle sales.

CAUTION: All taxes should be paid on or before the required due date to avoid penalties.

Procedure:

The balance in this account represents collections from customers for state or local taxes, applicable to vehicle sales only, which have not been remitted to the taxing agencies.

The balance in this account should be combined with the balances in Accounts 215-B, C, D, and E to arrive at a total value for financial statement reporting. Reconciliation is completed at month-end.

The collection and remittance of sales and use taxes should conform with the regulations of the taxing authorities.

(2/18)


FCA 3-19


TAXES – OTHER THAN PAYROLL AND INCOME: SALES AND USE TAX – OTHER THAN VEHICLES

DEBIT with:

1. Payments made to local and state agencies for sales and use tax.

CREDIT with:

1. Sales tax collected from parts and service customer sales.

2. The use tax payable on merchandise used and on which sales or use tax was not paid at the time of purchase.

3. The amount of use tax due on demonstrators.

4. Miscellaneous sales and use taxes.

CAUTION: All taxes should be paid on or before the required due date to avoid penalties.

Procedure:

The balance in this account represents sales tax collections from service, parts, and accessories sales; use tax due on merchandise consumed or used in the dealership activities; use tax on demonstrators; and miscellaneous sales and use taxes which have not been remitted to the taxing agencies.

The collection of sales taxes and the calculation of use taxes should conform to respective state and local regulations.

The balance in this account should be combined with the balances in Accounts 215-A, C, D, and E to arrive at a total value for financial statement reporting. Reconciliation is completed at month-end.


FCA

(2/18)


TAXES – OTHER THAN PAYROLL AND INCOME: VEHICLE LICENSE AND TITLE FEES

DEBIT with:

1. Payments made to local and state agencies for license and title fees.

2. The amount of income, if any, earned for the licensing and titling of vehicles sold.

CREDIT with:

1. Amounts collected from customers for vehicle license and title fees.

CAUTION: All such license and title fees should be paid on or before the required due date to avoid penalties.

Procedure:

Only the actual amount of the tax liability should remain in this account each month-end.

The balance in this account should be combined with the balances in Accounts 215-A, B, D, and E to arrive at a total value for financial statement reporting.

(2/18)


FCA 3-21


TAXES – OTHER THAN PAYROLL AND INCOME: REAL AND PERSONAL PROPERTY

DEBIT with:

1. Amounts paid to taxing authorities. 2. Adjustments to decrease the accrual

balances based on current estimates.

Procedure:

CREDIT with:

1. The monthly accruals for real and/or personal property taxes.

2. Adjustments to increase the accrual balances, based on current estimates.

Real and/or personal taxes become liabilities on dates specified by state or local law.

The exact amount of the liability may not be determinable; therefore, an estimated amount should be recorded. The estimated liability should be adjusted to the actual amount when it has been determined.

The balance in this account should be combined with the balances in Accounts 215-A, B, C, and E to arrive at a total value for financial statement reporting.


FCA

(2/18)

CURRENT LIABILITIES Account 215-E

TAXES – OTHER THAN PAYROLL AND INCOME: STATE AND LOCAL TAXES – OTHER

DEBIT with:

1. Payments made to taxing agencies applicable to taxes accrued in this account.

2. Adjustments to reduce the accrual balance to more current estimates, or to actual liability.

Procedure:

CREDIT with:

1. The accrual for state and local taxes for which specific accounts have not been provided.

2. Adjustments to increase the respective accrual to more current estimates, or to actual liability.

The balance in this account could include such state and local taxes as:

A. Mercantile/Avalon taxes B. Gross receipts taxes C. Corporate franchise taxes D. Business activity taxes E. Intangible taxes, etc.

All accrued taxes, licenses, and permits should be scheduled in detail fully describing each tax item, and taxable period covered, on the Prepaid and Accrued Accounts Schedule, Form DUAS-355. The balance shown on this schedule should agree with the balance in this account each month-end.

The estimated liability for various taxes should be adjusted to the actual amount when determined.

The Standard Entries Journal, Form DUAS-185, should be used to record the monthly accruals.

Seek advice regarding these taxes from your accountant and/or legal tax counselor.

(2/18)


FCA 3-23


ACCRUED INCOME TAXES

DEBIT with:

1. Payments of federal, state, and local income taxes.

CREDIT with:

1. The unpaid balance of federal, state, and local income tax liability for the previous taxable year.

2. Amounts that may be assessed as a result of audits of prior years' tax returns.

3. The estimated income tax on the current year's taxable income.

CAUTION: Income taxes should be paid on or before the required due date to avoid penalties.

Procedure:

It is recommended that sub-accounts, on separate general ledger sheets, be used to record each accrued income tax. The total of these sub-accounts should be combined for financial statement reporting.

The income tax liability in this account at the end of the taxable year, should be based upon the actual tax liability indicated on the tax returns prepared for submission.


FCA

(2/18)


OTHER ACCRUED EXPENSES: UTILITIES

DEBIT with:

1. Payments made applicable to expenses accrued in this account.

2. The reversal of the previous months accrual.

CREDIT with:

1. The amount of all utility expenses incurred, but not paid.

2. Any adjustment to increase the accrual balance to actual liability.

CAUTION: The balance in this account represents the estimated expenses incurred for all utilities, which are payable in a future accounting period.

Procedure:

Typical utilities accrued include such items as: Fuel Electricity Gas Water Telephone and Telegraph

The estimated expenses should be accrued from the last billing cut-off date, or previous month-end, to the current month-end, whichever is applicable.

The basis for recording the accrued expense should be realistic and accurate.

The Standard Entries Journal, Form DUAS-185, should be used to record Other Accrued Expenses.

The balance in this account should be combined with the balances in Accounts 217-B, C, and D to arrive at a total value for financial statement reporting.

(2/18)


FCA 3-25


OTHER ACCRUED EXPENSES: LEGAL AND AUDIT

DEBIT with:


2. Any adjustment to reduce the accrual balance to actual liability, or based on current estimates.

CREDIT with:

1. The monthly accrual for all legal and audit fees.


3. Estimated cost of year-end audit/tax services performed by dealership’s independent Certified Public Accountant (CPA).

CAUTION: The balance in this account represents the estimated expenses incurred for all legal and audit fees, which are payable in a future accounting period.

Procedure:

Typical services for which provision should be made include such items as:

Professional legal counsel Audit services of an outside firm Collection agency fees



The balance in this account should be combined with the balances in Accounts 217-A, C, and D to arrive at a total value for financial statement reporting.


FCA

(2/18)


OTHER ACCRUED EXPENSES: EMPLOYER’S PENSION CONTRIBUTIONS

DEBIT with:

1. Payments made to the fund trustee. 2. Any adjustments to reduce the account

balance to actual liability.

CREDIT with:

1. The amount of contributions for pension and retirement funds resulting from dealership contributions.

2. Any adjustments to increase the account balance to actual liability.

CAUTION: The balance in this account represents the dealership's liability for pension and retirement funds accumulated to date, and payable in a future accounting period.

Pension/retirement plans usually establish a fixed percentage of employees' total gross wages as a minimum requirement for the employer's contributions. Regardless of the method established, quarterly and annual adjustments are usually required to bring the total employer contribution into agreement with the requirements of the trust fund.

Legal and accounting advice should be obtained on all questions relating to planning and administration of pension and retirement plans.

Procedure:

There are a variety of pension and retirement plans available to a dealership. Regardless of the type, such plans have two common features, they may be:

CONTRIBUTORY – Plans in which both the dealership and the participating employees make

or make contributions. NON-CONTRIBUTORY – Plans in which the dealership (employer) makes the entire contribution.

The following accounting procedure provides a uniform method of maintaining records and recording contributions to pension and retirement trust funds:

CONTRIBUTORY PLANS Employee's contributions–refer to description of Miscellaneous Employee Deductions, Account 201-C.

Employer's (dealership) contribution should be accrued at the end of each month. The offsetting charge to expense should be to Employee Benefits, Account 363.

Fund payments should be made in accordance with the provisions of the plan. In the event that fund payments exceed the required amount, the excess should be recorded as a Prepaid Expense in Account 145-F (with a subsequent credit to Account 363). The excess payments set up as a prepaid expense will usually be reduced or eliminated during ensuing months to compensate for shortages in payments. However, many plans provide for refunding excess fund payments on a monthly or quarterly basis. Therefore, based on the plan provisions, excess payments may be charged to Other Receivables, Account 114.

Fund payment shortages should be verified by recalculation and, if correct, an adjusting entry should be made to this account, with an offsetting charge to expense, Account 363.

(2/18)


FCA 3-27


OTHER ACCRUED EXPENSES: EMPLOYER’S PENSION CONTRIBUTIONS (Cont’d)

Procedure:

NON-CONTRIBUTORY PLANS Only the employer contributes. Procedures for employer's accrual and payment are the same as outlined above.

EMPLOYER METHODS OF CONTRIBUTION National and local dealer associations establish pension and retirement plans for their dealers. These plans have most of the features common to all plans, however, there are variations in the way employer's contributions are determined and paid to the fund trustee. Some of these variations are based on:

1. New Vehicles sold at retail–established as a flat amount on each new unit. Payments made directly to fund

trustee at each month-end or calendar quarter.

A journal entry should be made to record the amount accrued in this account and the offsetting charge to expense, Account 363. This may be made in the New Vehicle Department–Sales Journal, or the Standard Entries Journal.

2. New Vehicles purchased–established as a flat amount for each unit purchased directly from the

manufacturer. This amount is added to the factory invoice and paid to the dealer association by the manufacturer. The association then forwards such contributions to the fund trustee.

As each applicable unit is recorded in the New Vehicle Purchase Journal, the amount of the employer's contribution on the factory invoice should be removed from the inventory cost of the unit and debited to expense, Account 363.

3. Percentage of earnings (profit sharing)–usually established on a percentage calculation after all journals

have been closed and posted to the general ledger. Payments are made directly to the fund trustee at each month-end, or calendar quarter. Payments may also be made on the flat amount per unit (sold or purchased) bases previously outlined.

To record the amount of the employer's contribution, a trial balance must be prepared and the calculation made. The Standard Entries Journal should be used to record the calculated amount in this account, with the offsetting charge to expense, Account 363.

If payments are made on the flat amount per unit bases, it may be necessary to make an adjusting entry at month-end for any shortage or excess in fund payments.

The balance in this account should be combined with the balances in Accounts 217-A, B, and D.


FCA

(2/18)


OTHER ACCRUED EXPENSES: MISCELLANEOUS

DEBIT with:


2. The reversal of the previous months accrual. 3. Any adjustment to reduce the accrual

balance to actual liability, or based on current estimates.

Procedure:

CREDIT with:

1. The monthly accrual for all other expenses for which no specific account has been provided.



The balance in this account should include additional expenditures that will be incurred, such as outside help employed for annual physical inventories, etc., which are payable in a future accounting period.

It is recommended that all accruals pertaining to the dealerships lease and rental operations be maintained in this account. For control purposes, it is recommended that a Distribution Sheet be used to categorize the various accruals.


The balance in this account should be combined with the balances in Accounts 217-A, B, and C to arrive at a total value for financial statement reporting.

(2/18)


FCA 3-29


WHOLESALE FINANCE LIABILITY: NEW CARS AND TRUCKS

DEBIT with:

1. Payments of notes. 2. The principal amounts of notes on new cars

and trucks transferred to: Demonstrator service Company Cars Service or Parts service Driver Education service Leasing service Etc.

CREDIT with:

1. The principal amounts due finance institutions on short-term notes secured by new cars and trucks.

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

Procedure:

This is a control account which should be supported by the subsidiary Vehicle Inventory Record, Form DUAS-305. This subsidiary record is designed to disclose all aspects of the new vehicle inventory, finance liability, and sale information. A detailed record of the unpaid amount due on each new vehicle should be maintained on the Vehicle Inventory Record.

Each month-end, supporting inventory and finance liability schedules should be prepared on Monthly Analysis Summary, Form DUAS-373, which should be in agreement with the respective general ledger account balances. Any variances should be located, their source determined, and proper disposition made before the financial statement is prepared.

The finance company should be requested to furnish a statement monthly, or at least quarterly, detailing by serial number and amount, all outstanding notes. This should be carefully reconciled to the dealership's records to determine if all payments have been promptly recorded, that payment for all cars and trucks sold have been made, and that no notes have been erroneously added by the finance company.

All finance liabilities on vehicles transferred should be recorded promptly; normally at the same time the vehicle is removed from inventory.


FCA

(2/18)


WHOLESALE FINANCE LIABILITY: DEMONSTRATORS

DEBIT with:

1. Payments of notes.

CREDIT with:

1. The principal amounts due finance institutions on short-term notes secured by demonstrator vehicles.

CAUTION: This account should be used only for FCA Vehicle lines. For additional information, refer to the account description of Demonstrators, Account 127.

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

Procedure:

A detailed record of the unpaid amount due on each new vehicle used as a demonstrator should be maintained on the Vehicle Inventory Record, Form DUAS-305.

When a new vehicle is placed in demonstrator service, the subsidiary Vehicle Inventory Record should indicate:

A. Date placed in demo service B. Assigned to

This procedure will facilitate "wholesale finance checks" conducted periodically by the finance institution. It will also aid in locating units when the month-end physical inventory is taken.

The finance liability, if any, should be promptly transferred by General Journal entry from Inventory Finance Liability–New Cars and Trucks, Account 220, to this account.

Each month-end a supporting inventory and finance liability schedule should be prepared on Monthly Analysis Summary, Form DUAS-373, which should be in agreement with the respective general ledger account balances. Any variances should be located, their source determined, and proper disposition made before the financial statement is prepared.

(2/18)


FCA 3-31


WHOLESALE FINANCE LIABILITY: USED CARS AND TRUCKS

DEBIT with:


CREDIT with:

1. The principal amounts due finance institutions on short-term notes secured by used cars and trucks.

2. Any remaining finance liability on Driver Education Cars removed from service.


Procedure:

A detailed record of the unpaid amount due on each used vehicle should be maintained on the Vehicle Inventory Record, Form DUAS-305.

When Driver Education Cars are returned by schools after completing their education service, they should be placed in the used car inventory. At the same time, any remaining finance liability on such vehicles should be transferred from Account 255 to this account.

Each month-end a list of unpaid notes, secured by used cars and trucks, should be prepared on a Monthly Used Vehicle Analysis sheet and the total reconciled with the balance in this account. This schedule provides a simultaneous inventory and finance liability analysis.

Any variances should be located, their source determined, and proper disposition made before the financial statement is prepared.


FCA

(2/18)


WHOLESALE FINANCE LIABILITY: USED CARS AND TRUCKS CPOV

DEBIT with:


CREDIT with:

1. The principal amounts due finance institutions on short-term notes secured by CPOV Vehicles.

CAUTION: Individual wholesale inventory finance notes should be paid off immediately upon disposal of the vehicle. This account is to be used by Five Star Dealers only.

Procedure:

This is a controlled account that should be supported by a subsidiary record. The finance liability record should be maintained on the same record as unit inventory record. It is recommended that the Vehicle Inventory Record, Form DUAS-305, be used whenever possible.

At month-end a supporting inventory and finance liability schedule should be prepared on Monthly Analysis Summary, Form DUAS-373 that should be in agreement with the respective general ledger account balances. Any variances should be located, their source determined, and proper disposition promptly made.

The finance company should be requested to furnish a statement monthly, detailing by serial number and amount of all outstanding notes. This statement should be carefully reconciled to the dealership's records to determine that all units sold have been paid, and that no notes have been erroneously added by the finance company.

(2/18)


FCA 3-33


OTHER INVENTORY FINANCE LIABILITY

DEBIT with:

1. Payment of notes.

CREDIT with:

1. The principal amounts due finance institutions on short-term notes secured by new, used, and demonstrator:

A. Farm implements/Tractors B. Special truck bodies/Snow plows C. Trailer Homes/Campers D. Boats/Motor Bikes E. Snow Mobiles, etc.

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

Procedure:

This is a control account which should be supported by a subsidiary record. For convenience, the finance liability record should be maintained on the same record as unit inventory record. It is recommended that the Vehicle Inventory Record, Form DUAS-305, be used whenever possible.

Each month-end a supporting inventory and finance liability schedule should be prepared on Monthly Analysis Summary, Form DUAS-373, which should be in agreement with the respective general ledger account balances. Any variances should be located, their source determined and proper disposition promptly made.

The finance company should be requested to furnish a statement monthly, detailing by serial or note number and amount all outstanding notes. This statement should be carefully reconciled to the dealership's records to determine that all payments have been promptly recorded, all units sold have been paid and that no notes have been erroneously added by the finance company.


FCA

(2/18)


SECURITY DEPOSITS: LEASE VEHICLES

DEBIT with:

1. The amount of any security deposit refunded to lease customer.

2. The portion of any security deposit applied against customer's lease settlement.

CREDIT with:

1. All deposits received as performance guarantees on Lease Agreements.

CAUTION: This account should not be used to record pre-payment (or advance payments) by lease customers against their monthly lease rate. Any such advance payments should be credited to Other Receivables, Account 114.

Procedure:

The balance in this account represents the total of all security deposits refundable to lease customers upon the completion of their respective lease agreements.

A subsidiary record should be maintained, indicating details of each security deposit.

(2/18)


FCA 3-35

OTHER LIABILITIES Account 250

RESERVE FOR REPOSSESSION LOSSES

DEBIT with:

1. Any adjustment to reduce the reserve balance based on current estimates.

2. The amount paid in excess of current wholesale value (less estimated reconditioning costs) for repossessed vehicles.

CREDIT with:

1. The monthly provision for estimated repossession loss.

2. Any adjustments to increase the estimated balance.

3. The amount recovered (by collection from customers) on repossession losses originally charged to this account.

CAUTION: The balance in this account represents the estimated losses for repossessed vehicles.

Procedure:

There are two methods of accounting for repossession losses =

1. The reserve method, utilizing Account 250, recognizes anticipated future losses from repossessions. This reserve provision should be based on prior experience. The estimated losses from units originally sold as new cars and those originally sold as used cars should be considered separately in determining the total estimated liability. Actual losses are then charged to the reserve account as they occur. This method facilitates control of costs and provides closer matching of losses with income. Since special handling of this expense may be required for income tax purposes, dealers should obtain tax counsel regarding the use of this account.

2. The direct write-off method does not recognize losses until specific repossessions occur, at which time they are

charged to Account 455-E, Repossessed Vehicle Losses–New; or Account 480-E, Repossessed Vehicle Losses–Used, depending on whether the sale that led to the repossession was a new vehicle sale or a used vehicle sale. Under this method, Account 250 is not used.

After a method has been selected, it should be used consistently. Tax counsel should be consulted before any change is made in the method of accounting for repossession losses.

Finance income charged back due to repossessions should be handled as a charge to Account 457-F, Finance and Insurance-Income New; or Account 481-F, Finance and Insurance Income Used, as appropriate.

After purchase of repossessed vehicles, further write-downs to estimated wholesale value and sales of the vehicles should be handled as normal used vehicle transactions.


FCA

(2/18)


DRIVER EDUCATION VEHICLE LIABILITY

DEBIT with:

1. Payments of notes. 2. Any remaining finance liability on

vehicles returned from Driver Education service.

CREDIT with:

1. The principal amounts due finance institutions on short-term notes secured by new vehicles placed in Driver Education service.

CAUTION: Refer to the account description of Driver Education Cars, Account 155, for additional information.

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

Procedure:

This is a control account which should be supported by a subsidiary record. A detailed record of the unpaid amount due on each vehicle may be maintained on the Vehicle Inventory Record, Form DUAS-305; simultaneously with other pertinent information related to the unit.

When new cars are placed in driver education service, the finance liability, if any, should be promptly transferred by general journal entry from Inventory Finance Liability–New Cars and Trucks, Account 220, to this account.

Each month-end a supporting finance liability schedule should be prepared on a Monthly Analysis Summary, Form DUAS-373, and should be in agreement with this account balance. Any variances should be located, their source determined, and proper disposition promptly made.

An optional method of scheduling the inventory and finance liability may be adopted. Use of a separate Fixed Asset–Inventory and Depreciation Record, Form DUAS-367, may facilitate the accounting of these assets, their related finance liability, and depreciation record. Use of this form may eliminate repetitious schedules required each month-end to properly support these respective balance sheet accounts.

When driver education cars are returned to the dealership by the participating school, these vehicles should be promptly transferred by General Journal entry to Used Cars–Inventory, Account 127. Likewise, any remaining finance liability, should be transferred from this account to Inventory Finance Liability–Used Cars and Trucks, Account 227.

(2/18)


FCA 3-37


LEASE/RENTAL VEHICLE LIABILITY

DEBIT with:

1. Payments of notes. 2. Payments of depreciation (basic) amounts

invoiced under the Courtesy Transportation Program

CREDIT with:

1. The principal amounts due finance institutions on notes or contracts secured by vehicles in leasing or rental service.

2. The principal amounts due FCA Credit Corporation or other finance companies for vehicles placed under Courtesy Transportation Program (CTP).

CAUTION: The use of this account is intended for those dealerships engaged in leasing or renting vehicles on a supplemental basis. (Dealers without a separately established Lease/Rental business).

Dealers using vehicles for Courtesy Transportation Program (CTP) should use this account to report the liability less depreciation

Refer to the account description of Lease/Rental Vehicles, Account 156-A and Manual Section 7-Leasing, for additional information.

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

Procedure:

This is a control account which should be supported by a subsidiary record. A detailed record of the unpaid amount due on each vehicle should be maintained in this subsidiary record.

When new cars and trucks are placed in leasing service, the finance liability should be transferred by General Journal entry from Inventory Finance Liability–New Cars and Trucks, Account 220, to this account.

Each month-end, a supporting finance liability schedule should be prepared and be in agreement with this account balance. Any variances should be located, their source determined, and proper disposition promptly made.


FCA

(2/18)


COMPANY CARS AND SERVICE VEHICLES LIABILITY

DEBIT with:


CREDIT with:

1. The principal amounts due finance institutions on notes and contracts secured by:

Company cars Courtesy cars (non-revenue) Service vehicles Parts vehicles Etc.

CAUTION: Refer to the account description on Company Cars and Service Vehicles, Account 164-A.

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

Procedure:

This is a control account which should be supported by a subsidiary record. A detailed record of the unpaid amount due on each vehicle should be maintained.

When new cars and trucks are placed in company service, the finance liability should be transferred by General Journal entry from Inventory Finance Liability–New Cars and Trucks, Account 220, to this account.

Each month-end a supporting inventory and finance liability schedule should be prepared on a Monthly Analysis Summary, Form DUAS-373, and should be in agreement with the general ledger account balances. Any variances should be located, their source determined, and proper disposition promptly made.

An optional method of scheduling the inventory and finance liability may be adopted. Use of a separate Fixed Asset–Inventory and Depreciation Record, Form DUAS-367, may facilitate the accounting of these assets, their related finance liability, and depreciation record. Use of this form may eliminate repetitious schedules required each month-end to properly support these respective balance sheet accounts.

(2/18)


FCA 3-39

LONG TERM DEBT Account 260

NOTES PAYABLE – CAPITAL LOANS

DEBIT with:

1. Payment of the principal amount of loans recorded in this account.

CREDIT with:

1. The principal amount of long-term capital loans from banks and finance companies.

CAUTION: The balance in this account represents amounts due bank and finance companies on notes payable, either secured by collateral (other than vehicles) or unsecured, which are due and payable beyond one year from the original loan date.

Procedure:

A subsidiary record should be maintained indicating details of each loan.

Interest payable on capital loans should be recorded monthly and charged to Interest Expense–Other Than Floor Plan and Mortgage, Account 388.

The portion of the note which is due and payable within the succeeding twelve months from the balance sheet date should be shown on the Balance Sheet, Line 39, under the caption, "Amount Due Within One Year."


FCA

(2/18)


SUBORDINATED NOTES

DEBIT with:

1. Any reduction of the principal amount of debt recorded in this account.

CREDIT with:

1. The principal amount of all subordinated debt.

CAUTION: This account should be used to record subordinated debts only.

Procedure:

Subordinated notes are any debt owed by the dealership, which has been deferred or postponed by the creditor (lender) to all rights, claims, demands or indebtedness due a third-party-creditor.

Normally, under terms of the subordination agreement, the creditor agrees not to collect the indebtedness or receive any money from the dealership (excluding bona fide business transactions occurring in the normal course of business) without the prior written consent of the third-party-creditor to whom the debt is subordinated.

In the majority of cases, the debt being subordinated by the creditor represents loans made to the dealership by one or more investors or affiliates and is subordinated to the interest of the creditor providing the floor-plan or working capital loan.

(2/18)


FCA 3-41


MORTGAGES PAYABLE

DEBIT with:

1. All payments on the principal amount of mortgages included in this account.

CREDIT with:

1. The principal amount of long-term loans, secured by real property used in the dealership activity.

CAUTION: The balance in this account represents the amount due on notes secured by mortgages on real property (land, buildings and building equipment) owned and used by the dealership, which are due and payable beyond one year from the original loan date.

Mortgages on property other than that used in the automobile business should be recorded in Account 265.

Procedure:

This is a control account which should be supported by a subsidiary record, usually a copy of the mortgage and/or land contract, with a payment and interest schedule attached.

Interest on real estate mortgages and land contracts should be recorded monthly and charged to Interest on Mortgage Expense, Account 381.

That portion of mortgages and/or land contracts which is due and payable within the succeeding twelve months from the date of the balance sheet date should be shown on the Balance Sheet, Line 41, under the caption "Amount Due Within One Year."


FCA

(2/18)


OTHER NOTES AND CONTRACTS

DEBIT with:

1. Payments on the principal amount of all loans included in this account.

CREDIT with:

1. The principal amount of long-term loans received: A. From owners, officers, or stockholders B. On real property not used in the

dealership activity C. On personal property D. On equipment lease-purchase

contracts E. From other sources

CAUTION: Use this account for all other long-term notes and contracts secured or unsecured.

Procedure:

A subsidiary record should be maintained indicating details of each loan, note, mortgage, and contract.

Interest on all notes, contracts, and mortgages included in this account should be recorded monthly and charged to Interest Expense–Other Than Floor Plan and Mortgage, Account 388.

That portion of each note, contract, and mortgage included in this account that is due and payable within the succeeding twelve months from the balance sheet date should be shown on the Balance Sheet, Line 42, under the caption "Amount Due Within One Year."

(2/18)


FCA 3-43

LIFO RESERVE Account 268

Lifo Reserve - Inventory Adjustment

DEBIT with:

1. The amount of adjustment needed to decrease the reserve (as determined from the LIFO valuation).

CREDIT with:

1. The amount of adjustment needed to increase the reserve (as determined from the LIFO valuation).

CAUTION: This account is provided for those dealerships adopting the LAST-IN, FIRST-OUT (LIFO) Method of Inventory Valuation.

Proper use of this account can best be achieved by consulting a tax authority and/or certified public accountant.

Procedure:

This account is provided to record all-LIFO adjustments rather than applying the adjustments to the individual inventory accounts.

Normally entries are made only at year-end. The offsetting debit or credit should be to the appropriate L.I.F.O. account, either Account 610 or 710 (for the type of inventory being valued).

Be sure to reflect the LIFO adjustments on the 12th month financial statement (estimated if necessary) as well as, on the final/certified financial statement.

Any decision to adopt the L.I.F.O. method of inventory valuation and any procedures adopted for accounting and financial reporting under L.I.F.O. should be made with the advice of competent tax counsel.


FCA

(2/18)

NET WORTH Account 270

CAPITAL STOCK – PREFERRED

DEBIT with:

1. The par, or stated, value of preferred stock: A. Retired B. Converted to, or exchanged for, common

stock.

CREDIT with:

1. The par, or stated, value of preferred stock issued and outstanding in exchange for cash or other property.

CAUTION: This account should be used only by dealers operating as a corporation.

Procedure:

Separate subsidiary records should be kept for each class of stock outstanding.

The balance in this account should be equal in amount to the outstanding preferred stock as reflected in the appropriate stock certificate book.

Before engaging in transactions involving the corporation's capital stock, the dealership should obtain both legal and accounting advice relative to such transactions.

Adjustments of a capital nature (issuance or retirement of capital stock, adjustments in the par value of capital stock, etc.) should not be recorded in this account until the accounting year-end. Transactions of this nature should be recorded in Adjustments, Account 290 (refer to description of that account).

(2/18)


FCA 3-45


CAPITAL STOCK – COMMON

DEBIT with:

1. The par, or stated, value of common stock: A. Retired B. Converted to, or exchanged for,

preferred stock.

CREDIT with:

1. The par, or stated, value of common stock issued and outstanding in exchange for cash or other property.


Procedure:

Separate subsidiary records should be kept for each class of stock outstanding.

The balance in this account should be equal in amount to the outstanding common stock as reflected in the appropriate stock certificate book.

Before engaging in transactions involving the corporation's capital stock, the dealership should obtain both legal and accounting advice relative to such transactions.

Adjustments of a capital nature (issuance or retirement of capital stock, adjustments in the par value of capital stock, etc.) should not be recorded in this account until the accounting year-end. Transactions of this nature should be recorded in Adjustments, Account 290 (refer to description of that account).


FCA

(2/18)


ADDITIONAL PAID IN CAPITAL

DEBIT with:

1. Amounts of additional paid in capital which have been withdrawn by owners/officers.

CREDIT with:

1. Fair value of property or other assets received from stockholders as contributions to capital for which no capital stock is issued.

CAUTION: This account should be used only by a dealership operating as a corporation. It is recommended that the dealership obtain both legal and accounting counsel before any payment, withdrawals, or additional paid in capital are made.

Procedure:

If assets received as a contribution to capital are recorded at fair market value, tax counsel should be obtained to determine the proper value and depreciation for income tax purposes.

(2/18)


FCA 3-47


RETAINED EARNINGS

DEBIT with:

1. The loss for the accounting year, as shown in Profit or Loss - Current, Account 299, at the close of the year.

2. Any dividends declared and recorded in Dividends, Account 277, at the close of the year.

3. The debit balance in Adjustments, Account 290.

CREDIT with:

1. The net income for the accounting year (after income tax) as shown in Profit or Loss - Current, Account 299, at the close of the year.

2. The credit balance in Adjustments, Account 290.


This account should remain constant throughout the dealership's fiscal year.

Procedure:

The balance in this account represents the amount of net earnings (after income taxes and dividend distributions) accumulated in prior years and retained in the business.

Adjustments relating to transactions of prior years earnings or adjustments of a capital nature should not be recorded in this account. Transactions of this nature should be recorded in Adjustments, Account 290, which should subsequently be closed into this account at the end of the accounting year for corporations or Account 280 for proprietor and partnerships.


FCA

(2/18)

NET WORTH Account

DIVIDENDS 277

DEBIT with:

1. Amounts declared by the Board of Directors for distribution to stockholders.

CREDIT with:

1. Year-end entry to transfer the balance of this account to Retained Earnings, Account 275.


Dividends declared in prior years should not be charged to this account.

Procedure:

When dividends are declared payable at a subsequent date, debit this account and credit Dividends Payable, Account 205, for the total amount of dividends declared.

The balance in this account represents current year dividends declared for distribution to stockholders.

(2/18)


FCA 3-49


INVESTMENTS – PROPRIETOR OR PARTNERS

DEBIT with:

1. The balance of withdrawals recorded in Withdrawals, Account 285.

2. Any reduction in the proprietor or partners investment.

3. The debit balance in Adjustments, Account 290.

CREDIT with:

1. Cash and fair market value of assets invested in the business.

2. The net income for the accounting year, (after income tax) as shown in Profit or Loss–Current, Account 299.

3. The credit balance in Adjustments, Account 290.

CAUTION: This account should be used only by dealers operating as a proprietorship or partnership.

Proprietor or partners withdrawals should not be charged to this account until the end of the fiscal year, at which time Withdrawals, Account 285, would be closed to this account.

Procedure:

The balance in this account represents the total investment in the business, including the net earnings of prior years retained in the business.

In the case of a partnership, a separate investment account ledger sheet should be provided for each partner, showing the amount of individual investment; the total of these sheets should be shown on the financial statement for this account. Allocation of profits or losses to each partner's account should be made in accordance with the partnership agreement.


FCA

(2/18)

NET WORTH Account

WITHDRAWALS 285

DEBIT with:

1. Withdrawals of cash and/or merchandise during the current year.

2. The amount necessary to close the accounting period credit balance to Investments - Proprietor or Partners, Account 280.

CREDIT with:

1. The monthly credit for proprietor's or partner's salaries not taken.

2. The year-end entry to transfer the total withdrawals for the year to Investments - Proprietor or Partners, Account 280.

CAUTION: This account should be used only by dealers operating as a proprietorship or partnership.

Procedure:

A separate account should be maintained for each partner.

The balance in this account represents the amount of withdrawals (cash and/or merchandise) to date, and credit for that portion of salary not taken.

To permit operating expenses to reflect a proper amount charged as a salary for managing the business, a definite monthly compensation plan should be set up for the proprietor and each partner, and this compensation should be charged to Salaries–Owners and Officers, Account 399. If this compensation is not withdrawn, it should be placed to the proprietor's or partner's credit in this account.

(2/18)


FCA 3-51

NET WORTH Account

ADJUSTMENTS 290

DEBIT with:

1. Any adjustments applicable to prior year's earnings, that would decrease income accounts and/or increase expense accounts.

2. Adjustments to decrease the partnership or proprietorship investment accounts.

3. The total cost to reacquire outstanding shares of preferred and common stock which have not been permanently retired (Treasury Stock).

4. That amount less than par or stated value (discount) for common or preferred stock sold.

5. The year-end entry to transfer the credit balance of this account to: A. Retained Earnings, B. Investments-Proprietor or Partners, C. Capital Stock-Preferred or Common.

CREDIT with:

1. Any adjustments to prior year's earnings, that would increase income accounts and/or decrease expense accounts.

2. Adjustments to increase the partnership or proprietorship investment accounts.

3. Fair value of property or other assets received from stockholders as contributions to capital for which no capital stock is issued.

4. The par or stated value of preferred and common stock: A. Reissued B. Permanently Retired

5. The excess of par or stated value (premium) for preferred and common stock sold.

6. The year-end entry to transfer the debit balance of this account to: A. Retained Earnings, B. Investments-Proprietor or Partners, C. Capital Stock-Preferred or Common.

CAUTION: This account balance represents adjustments applicable to prior year's earnings which, if reflected in the current revenue and expense accounts, may materially distort current year's operations. It also reflects all adjustments of a capital nature such as adjustments in proprietorship or partnership investment accounts, and adjustments having to do with corporate stock issuance, reissuance, and retirement.

Treasury Stock is a corporation's own stock, once issued and fully paid, and later reacquired but not cancelled.

Procedure:

The balance in this account should be transferred at year-end (before the year-end statement is prepared). The adjustments affecting earnings should be transferred to Retained Earnings, Account 275, if the dealership is a corporation or to Investments-Proprietor or Partners, Account 280, if the dealership is a proprietorship or partnership. The adjustments affecting invested capital should be transferred to the appropriate capital account (Capital Stock, Accounts 270 and 271, or Investments–Proprietor or Partners, Account 280).

It is suggested that all adjustments shown in this account be categorized on a Distribution Sheet. For example, columns may be headed: Prior Year's Earnings; Current Year's Earnings; Stock Premiums and Discounts; Stock Reclassifications; Stock Retirements; Changes in Proprietor or Partners Investments; etc.

TREASURY STOCK: Before engaging in transactions involving the corporation's capital stock, the dealership should obtain both legal and accounting advice relative to stock transactions of this nature. In order to comply with legal requirements for disclosure of treasury stock, Line 45 properly captioned in the Net Worth section of the Balance Sheet may be used.


FCA

(2/18)


ESTIMATED INCOME TAX – CURRENT YEAR

DEBIT with:

1. The estimated federal, state, and local taxes due on the current year's taxable income.

CREDIT with:

1. The total federal, state, and local income taxes due based on year-end adjusted earnings.

CAUTION: This account balance represents the estimated amount of federal, state, and local income taxes on current year-to-date earnings.

Procedure:

This account is a deduction in the "Net Worth" section of the financial statement rather than a deduction from operations.

Each month-end federal, state, and local income taxes should be determined and adjusted by applying the current tax rates to the current year-to-date earnings. The offsetting entry should be to Accrued Income Taxes, Account 216.

When closing the account for the current year, the balance in this account should be transferred to Profit or Loss– Current, Account 299.

Income tax deficiencies levied in the current year, but assessed against prior year's operations, should be charged to Adjustments, Account 290.

(2/18)


FCA 3-53


PROFIT or (LOSS) – CURRENT

DEBIT with:

1. The balances at the year-end: A. In the Cost of Sales accounts B. In the Expense accounts C. In the Other Deductions accounts D. In the Estimated Income Tax – Current

Year account 2. The net profit for the current year (transferred

by closing entry).

CREDIT with:

1. The balances at the year-end: A. In the Sales accounts B. In the Other Income accounts

2. The net loss for the current year (transferred by closing entry).

CAUTION: There should be no balance in this account at the beginning of the accounting year.

The profit during the year is determined by entering the "net of the balances" of all accounts on the financial statement.

Procedure:

The balance in this account, after closing all accounts hereto, represents the net earnings or loss for the current year after provision for income taxes.

The net profit or loss (balance in this account) should then be transferred to Retained Earnings, Account 275, if a corporation; or, to Investments–Proprietor or Partners, Account 280, if a proprietorship or partnership.


FCA

(2/18)

SALES EXPENSES NEW VEHICLE DEPT. Account 301

SALESPERSONS’ COMMISSIONS AND INCENTIVES – NEW

DEBIT with: CREDIT with:

1. The gross commissions earned by salespeople on new vehicle sales.

2. The gross incentives earned by salespeople on new vehicle sales.

3. The month-end accrual of amounts earned in the current period, payable in a subsequent period.

1. The reversal of the month-end accrual of commissions and incentives earned on new vehicle sales.

CAUTION: Only commissions and/or incentives earned should be charged to this account.

It is recommended that a sub-account be used to record "Bird Dog" and "Prospector" fees and commissions paid to persons other than regular dealership employees. It is further recommended that the dealership enlist outside legal and accounting services to aid in determining the proper handling of such payments for local, state, and federal tax purposes.

Procedure:

When a guaranteed minimum pay plan for salespersons is used, proper accounting to correctly state sales earnings is essential. The amount of the minimum guarantee exceeding actual new vehicle commissions earned should be charged to Salespersons' Salaries – New Vehicles, Account 306.

Incentives include such items as premiums, prize points, etc., for which the dealership has incurred an expense.

(2/18)


FCA 4-1

SALES EXPENSESNEW VEHICLE DEPT. Account 302

SALES MANAGERS’ COMMISSIONS AND INCENTIVES – NEW


1. The gross amount of: A. Commissions B. Overrides C. Incentives earned by new vehicle

sales supervision. 2. The month-end accrual of amounts earned

in the current period, payable in a subsequent period.

1. The reversal of the month-end accrual for commissions, overrides, and incentives earned by new vehicle sales supervision.

CAUTION: Only commissions and/or incentives earned should be charged to this account. This account should not include commission paid on F&I Sales. F&I commissions related to New Vehicle sales must be charged to account 316.

The term "Earned" could have a different meaning in the accounting world and varies by situation. Please consult your CPA or Accounting Firm for advice.

Procedure:

When new vehicle sales managers are employed on a combination salary and commission (incentive pay plan) the base salary should be charged to Sales Managers' Salaries–New Vehicles, Account 307.

Incentives include such items as premiums, prize points, etc., for which the dealership has incurred and expense.


FCA

(2/18)


NEW VEHICLE INVENTORY MAINTENANCE


1. The expense of removing optional equipment transferred from new vehicles to the Parts and Accessories Department, at internal selling price.

2. The expense of labor and material to maintain the new vehicle inventory.

3. The cost of maintaining the inventory in saleable condition. Including wages of personnel (new vehicle lot person).

4. The cost of a full tank of gas at delivery.

Procedure:

1. Any inventory maintenance expense collected for vehicles sold or transferred to another dealer.

2. Amount of reimbursement for full tank of gas by the factory.

The labor and material expenses for installing optional equipment and accessories on new vehicles should be charged to the appropriate vehicle record card and inventory account.

Any data processing costs incurred for the purpose of inventory control and sales data reporting of new vehicles should be included in this account.

Records must be maintained, invoices or gas receipts, verifying fuel fill by serial number for all warranty related transactions.

(2/18)


FCA 4-3


POLICY SERVICE – NEW


1. The expense for repairs and inspections to new vehicles (previously sold by the dealer) for which there will be no charge to the customer or manufacturer.

CAUTION: The dealer should carefully review charges to this account with the service manager and/or the new vehicle sales manager each month.

Adjustments applicable to Warranty Service Claims (Overages and Shortages) should not be debited or credited to this account. Such adjustments should be debited or credited to the applicable Policy Adjustments Account, 346-A, 346-B or 356.

Procedure:

Charges to this account should be made at full customer labor rates performed and parts used.


FCA

(2/18)


SALESPERSONS’ SALARIES – NEW


1. The gross salaries earned by salespeople for selling new vehicles.

2. The month-end accrual of salaries earned in the current period, payable in a subsequent period.

1. The reversal of the month-end accrual of salaries.

CAUTION: Commissions earned on new vehicle sales should be charged to Sales Commissions and Incentives – New, Account 301.

Procedure:

When a guaranteed minimum pay plan for salespersons is used, proper accounting to correctly state sales earnings is essential. The amount of the minimum guarantee exceeding actual new vehicle commissions earned should be charged to this account.

(2/18)


FCA 4-5


SALES MANAGERS’ SALARIES – NEW


1. The gross salaries earned by managers of new vehicle salespeople.


1. The reversal of the month-end accrual of sales managers’ salaries.

CAUTION: Any commissions and/or incentives earned over and above the base salary should be charged to Sales Managers' Commissions and Incentives – New, Account 302.


F & I Managers’ Salaries - New (317) should not be included in this account.

Procedure:

When the sales manager is employed on a combination basis – New and Used, salaries should be properly allocated to the respective supervision account.

When new vehicle sales managers are employed on a combination salary and commission (incentive pay plan) the base salary should be charged to this account.


FCA

(2/18)


OTHER SALARIES – NEW


1. Salaries, wages and incentives earned by clerical and other employees of the New Vehicle Department.

Procedure:

This account would not include compensation to salespeople, sales managers nor new vehicle lot men. All other persons assigned to the New Vehicle Department, such as those listed below, should have their compensation debited to this account.

1. Title Clerks 2. File Clerks 3. Direct Mail Clerks 4. Finance and Insurance Persons 5. Telephone Contact Persons 6. Etc.

(2/18)


FCA 4-7


ADVERTISING – PRINT, TV, OTHER - NEW


1. All expenditures for advertising directly related to new vehicle sales.

2. The monthly write-off of the expired portion of prepaid advertising directly related to new vehicle sales.

CAUTION: This account should include advertising for the express purpose of promoting new vehicles sales only.

Dealer Group Funds billed on new vehicle invoices from the factory should not be charged to this account.

This account is not for Internet advertising.

Procedure:

This account includes such advertising expenses as newspaper, television, radio, magazine, direct mail (including postage), and cost of owner registration lists.

Consider breaking out methods of advertising into separate sub-accounts, this is a tool to track where the money is going and the benefits from such expenses. Expenditures related to sales personnel training should not be charged to this account.

Advertising that may be classified as Institutional or Goodwill, such as "Billboards" and "Yellow Pages" should not be charged to this account but should be charged to Advertising–General and Institutional, Account 367.

Internet Advertising should be charged to Account 318, Advertising - Internet only, New.


FCA

(2/18)

SALES EXPENSES NEW VEHICLE DEPT. Account 309-A

ADVERTISING CREDIT - PRINT, TV, OTHER – NEW


1. The amount of advertising credits / assistance monies established by the manufacturer under the current prevailing assistance program rules and guidelines. Example might be rebates or refunds from dealer advertising associations.

CAUTION: Advertising credits / assistance should be recorded / accrued as they are earned and not when the monies are actually received.

This account is not for Internet advertising credits. For Internet advertising credits, please use Account 318A.

Procedure:

Amounts reimbursed by local dealer advertising associations for the purpose of offsetting a portion of new vehicle advertising expenses are to be separately classified as advertising credits - New. The desired result will show gross advertising expenses reflected in account 309 with gross advertising credits/assistance reflected in account 309A.

The suggested accounting entry is as follows:

Debit Credit Other Receivables - 114 Advertising Credit - Print, TV, Other – New - 309A

(2/18)


FCA 4-8A


SALES PERSONNEL TRAINING – NEW


1. Expenditures for training personnel in new programs and selling techniques related to the selling of new vehicles.

CAUTION: Amounts charged to this account should be for the express purpose of training sales personnel in the techniques of selling new vehicles.

Procedure:

Typical expenditures normally charged to this account may include such items as: Visual Aids – Production films and slides Sales Aid Kits – Facts Books, Color, and Upholstery charts and books Sales Training Material Expense of attending sales training schools and conferences (includes transportation, meals, and lodging) Coffee, etc., purchased for sales meetings in the dealership Various other sales training material

For Financial Statement reporting, the balance in this account should be combined with the balance in Account 330 (Sales Personnel Training Used).


FCA

(2/18)


DEMONSTRATION EXPENSE – NEW


1. The expense of operation and maintenance of new vehicles in demonstrator service.

2. Expense allowances to salespeople using their personal cars for demonstration purposes.

3. Losses due to physical damage of demonstrators.

Procedure:

1. The amount of rental charged to salespeople for the use of dealer-owned cars for demonstration purposes.

Labor and material used in maintaining and repairing demonstrators should be charged to this account on an internal repair order at the internal selling rate.

Typical charges to this account include such demonstrator-related items as:

License, sales/tax, and title fees Insurance premiums Gasoline and oil Washing and lubrication General maintenance and repairs Safety inspections (vehicle stickers) Allowance to salespeople for use of personal cars Losses resulting from accidents (uninsured portion)

(2/18)


FCA 4-10


INTEREST ON FLOOR PLAN – NEW


1. The interest expense applicable to new vehicle (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 - new vehicles and demonstrators.

1. The amount of Floor Plan Allowance based on the current rate established by the manufacturer.

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

3. The reversal of the month-end accrual for interest on inventory financing - new vehicles and demonstrators.

CAUTION: Individual wholesale inventory finance notes should be paid off immediately upon disposal of the vehicle. Dealerships which do not floor plan new vehicles should credit Miscellaneous Income, Account 609, with the allowances received from the factory.

Procedure:

Accounting instructions pertaining to the Floor Plan Allowance are contained in Factory Receivables – Floor Plan Allowance, Account 116-D.

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 the Standard Entries Journal, Form DUAS-185.


FCA

(2/18)

SALES EXPENSESNEW VEHICLE DEPT. Account 315-A

FLOOR PLAN INTEREST CREDITS – NEW


1. The amount of floor plan credits / assistance monies established by the manufacturer under the current prevailing assistance program rules and guidelines.

CAUTION: Floor plan interest credits should be recorded / accrued as they are earned and not when the monies are actually received.

Procedure:

Amounts reimbursed by FCA for the purpose of offsetting a portion of new vehicle gross interest carrying charges are to be separately classified as floor plan interest credits. The desired result will show gross floor plan interest reflected in account 315 with gross floor plan assistance reflected in account 315A.


Debit Credit FCA Receivable - 116D Floor Plan Interest Credit - New - 315A

(2/18)


FCA 4-11A


F & I MANAGERS’ COMMISSIONS - NEW

DEBIT with:

1. The gross amount of: A. Commissions B. Overrides earned by new vehicle

F & I managers. 2. The month-end accrual of amounts earned

in the current period, payable in a subsequent period.

CREDIT with:

1. The reversal of the month-end accrual for commissions and overrides earned by new vehicle F & I managers.

CAUTION: Only commissions earned on F&I new vehicles should be charged to this account. F&I Used Commission should not be included in this account.


Procedure:

When new vehicle F & I managers are employed on a combination salary and commission (incentive pay plan) the base salary should be charged to F & I Managers’ Salaries–New Vehicles, Account 317.


FCA

(2/18)

F & I MANAGERS’ SALARIES – NEW

DEBIT with:

1. The gross salaries earned by managers of new vehicle F & I personnel.


CREDIT with:

1. The reversal of the month-end accrual of New Vehicle F&I Manager salaries.

CAUTION: Any commissions earned over and above the base salary should be charged to F & I Managers' Commissions – New, Account 316.


Procedure:

When the F & I manager is employed on a combination basis – New and Used, salaries should be properly allocated to the respective supervision account.

When new vehicle F & I managers are employed on a combination salary and commission (incentive pay plan) the base salary should be charged to this account.

4-11D DEALER UNIFORM ACCOUNTING SYSTEM

FCA

(2/18)

SALES EXPENSES

NEW VEHICLE DEPT. Account 318

ADVERTISING – INTERNET ONLY - NEW

DEBIT with:

1. All expenditures for advertising directly related to new vehicle sales.

2. The monthly write-off of the expired portion of prepaid advertising directly related to new vehicle sales.

CREDIT with:

CAUTION: This account should include advertising for the express purpose of promoting new vehicles sales only.

Dealer Group Funds billed on new vehicle invoices from the factory should not be charged to this account.

Procedure:

This account includes advertising expenses related to internet advertising campaigns only and cost of owner registration lists.



Advertising expenses related to newspaper, television, radio, magazine and direct mail should be charged to Advertising - Print, TV, Other - Account 309.

4-11F DEALER UNIFORM ACCOUNTING SYSTEM

FCA

(2/18)

USED VEHICLE DEPT. Account 321

SALESPERSONS’ COMMISSIONS AND INCENTIVES – USED

DEBIT with:

1. The gross commissions earned by salespeople on used vehicle sales.

2. The gross incentives earned by salespeople on used vehicle sales.

3. The month-end accrual of amounts earned in the current period, payable in a subsequent period.

CREDIT with:

1. The reversal of the month-end accrual of commissions and incentives earned on used vehicle sales.


It is recommended that a sub-account be used to record "Bird Dog" and "Prospector" fees and commissions paid to persons other than regular dealership employees.

The dealership should enlist outside legal and accounting services to aid in determining the proper handling of such payments for local, state, and federal tax purposes.

Procedure:

When a guaranteed minimum pay plan for salespersons is used, proper accounting to correctly state sales earnings is essential. The amount of the minimum guarantee exceeding actual new vehicle commissions earned should be charged to Salespersons' Salaries – Used, Account 326.



FCA

(2/18)

SALES EXPENSES USED VEHICLE DEPT. Account 322

SALES MANAGERS’ COMMISSIONS AND INCENTIVES – USED


1. The gross amount of: A. Commissions B. Overrides C. Incentives earned by used

vehicles sales supervision. 2. The month-end accrual of amounts

earned in the current period, payable in a subsequent period.

1. The reversal of the month-end accrual for commissions, overrides, and incentives earned by used vehicle sales supervision.


This account should not include commission paid on F & I Sales. F & I commissions related to Used Vehicle sales must be charged to Acct. 336.


Procedure:

When used vehicle sales managers are employed on a combination salary and commission (incentive pay plan) the base salary should be charged to Sales Managers' Salaries–Used, Account 327.


(2/18)


FCA 4-13

SALES EXPENSESUSED VEHICLE DEPT. Account 323

USED VEHICLE INVENTORY MAINTENANCE


1. The expense of maintaining used vehicles in salable condition after they have been reconditioned.

CAUTION: Used vehicle maintenance expense does not add value to the inventory.

Reconditioning costs increase the value of used vehicles and should be added to the inventory value (cost) of such vehicles.

Procedure:

Typical charges to this account include such items as:

Repairing tires Recharging batteries Washing Gas and oil for daily engine warm-up Wages of personnel (used vehicle lot person) assigned to maintain used vehicles in salable condition. Data processing used by the used vehicle department.

Such expense should be charged to this account rather than to the cost of reconditioning, because there is no incremental value.


FCA

(2/18)


POLICY AND WARRANTY SERVICE – USED


1. The expense incurred for labor and material used in making repairs to used vehicles (previously sold) under the terms of any used vehicle guarantee and/or warranty, for which there will be no charge to the customer or manufacturer.

CAUTION: The dealer should carefully review charges to this account with the service manager and/or the used vehicle sales manager each month.

Labor and materials used to increase the value of a used vehicle and place it in salable condition are considered as reconditioning costs; therefore, should be charged to the individual unit and become a part of the inventory value (cost).

Adjustments applicable to Warranty Service Claims (overages and shortages) should not be debited or credited to this account. Such adjustments should be debited or credited to the applicable Policy Adjustments Account, 346-A, 346-B or 356.

Procedure:

Charges to this account should be made at the internal selling price of labor performed and parts used.

In states and municipalities imposing sales taxes, it is important to ascertain that the procedure of recording amounts charged to customers under a 50-50 or other similar guarantee is in accordance with requirements of such tax laws in respect to the collection and payment of applicable taxes.

(2/18)


FCA 4-15


SALESPERSONS’ SALARIES – USED


1. The gross salaries earned by salespeople for selling used vehicles.


1. The reversal of the month-end accrual of salaries.

CAUTION: Commissions earned on used vehicle sales should be charged to Sales Commissions and Incentives – Used, Account 321.

Procedure:

When a guaranteed minimum pay plan for salespeople is used, proper accounting to correctly state sales earnings is essential. The amount of the minimum guarantee exceeding actual used vehicle commissions earned, if any, should be charged to this account.


FCA

(2/18)


SALES MANAGERS’ SALARIES – USED


1. The gross salaries earned by managers of used vehicle salespeople.


1. The reversal of the month-end accrual of sales managers' salaries.

CAUTION: Any commissions and/or incentives earned over and above the base salary should be charged to Sales Managers' Commissions – Used, Account 322.

F&I Used Salaries (337) should not be included in this account.


Procedure:

When the sales manager is employed on a combination basis – New and Used, salaries should be properly allocated to the respective supervision account.

When used vehicle sales managers are employed on a combination salary and commission (incentive pay plan) the base salary should be charged to this account.

(2/18)


FCA 4-17


OTHER SALARIES – USED


1. Salaries, wages and incentives earned by clerical and other employees of the Used Vehicle Department.

Procedure:

This account would not include compensation to salespeople, sales managers nor used vehicle lot men. All other persons assigned to the Used Vehicle Department, such as those listed below, should have their compensation debited to this account.

1. Title Clerks 2. File Clerks 3. Direct Mail Clerks 4. Finance and Insurance Persons 5. Telephone Contact Persons 6. Etc.


FCA

(2/18)


ADVERTISING – PRINT, TV, OTHER - USED

DEBIT with:

1. All expenditures for advertising directly related to used vehicle sales.

2. The monthly write-off of the expired portion of prepaid advertising, if any, directly related to used vehicle sales.

CREDIT with:

CAUTION: This account should include advertising for the express purpose of promoting used vehicle sales only.

Dealer Group Funds billed on used vehicle invoices from the factory should not be charged to this account.

This account should not include Internet advertising.

Procedure:

This account includes such advertising expenses as newspaper, television, radio, magazine, and direct mail (including postage).


Advertising that may be classified as Goodwill, such as “Billboards” and “Yellow Pages” should not be charged to this account but should be charged to Advertising - General and Institutional, Account 367.

Internet advertising should be charged to Account 338, Advertising - Internet Only - Used.

(2/18)


FCA 4-19


SALES PERSONNEL TRAINING – USED

DEBIT with:

1. Expenditures for training personnel in the techniques of reconditioning, merchandising, and selling used vehicles.

CREDIT with:

1. Expenditures for training personnel in the techniques of reconditioning, merchandising, and selling used vehicles.

CAUTION: Amounts charged to this account should be for the express purpose of training personnel in the methods of reconditioning, merchandising, and selling used vehicles.

Procedure:

Typical expenditures normally charged to this account may include such items as:

Visual Aids Sales aid Kits Reconditioning Schools Merchandising Schools Sales Training Schools and Conferences (including transportation, meals, and lodging) Coffee, etc., purchased for sales meetings in the dealership Miscellaneous related expenses.


FCA

(2/18)


DEMONSTRATION EXPENSE – USED


1. The expense of operation and maintenance of used vehicles in demonstrator service.

2. Losses due to physical damage of used vehicles used as demonstrators.

Procedure:

1. The amount of rental charged salespeople for the use of dealer-owned demonstrators.

Labor and material used in maintaining and repairing used vehicles used as demonstrators should be charged to this account on an internal repair order at the internal selling rate.

Typical charges to this account include such demonstrator related items as:

License, sales/use tax, and title fees Insurance premiums Gasoline and oil Washing and lubrication General maintenance and repairs Safety inspections (vehicle stickers) Losses resulting from accidents (uninsured portion)

(2/18)


FCA 4-21


INTEREST ON FLOOR PLAN – USED


1. The interest expense applicable to used 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 reversal of the month-end accrual for interest on inventory financing – used vehicles and demonstrators.


Procedure:

Accrued interest should be computed from the financial institution's billing or cut-off date to the end of the month. The accrued interest should be recorded on the Standard Entries Journal, Form DUAS-185.


FCA

(2/18)


F & I MANAGERS’ COMMISSIONS – USED

DEBIT with:

1. The gross amount of: A. Commissions B. Overrides earned by used

vehicles F & I supervision. 2. The month-end accrual of amounts

earned in the current period, payable in a subsequent period.

CREDIT with:

1. The reversal of the month-end accrual for commissions and overrides earned by used vehicle F & I supervision.

CAUTION: Only commissions earned on F & I Used Vehicles should be charged to this account.


Procedure:

When used vehicle F & I managers are employed on a combination salary and commission (incentive pay plan) the base salary should be charged to F & I Managers' Salaries–Used, Account 337.

(2/18)


FCA 4-22A

SALES EXPENSES

USED VEHICLE DEPT. Account 337

F & I MANAGERS’ SALARIES – USED

DEBIT with:

1. The gross salaries earned by managers of used vehicle F & I personnel.


CREDIT with:

1. The reversal of the month-end accrual

of F & I managers' salaries.

CAUTION: Any commissions and/or incentives earned over and above the base salary should be charged to F & I Managers' Commissions – Used, Account 336.


Procedure:

When the F & I manager is employed on a combination basis – New and Used, salaries should be properly allocated to the respective supervision account.

When used vehicle F & I managers are employed on a combination salary and commission (incentive pay plan) the base salary should be charged to this account.

(2/18)


FCA 4-22C

NEW VEHICLE DEPT. Account 338

ADVERTISING – INTERNET ONLY - USED

DEBIT with:

1. All expenditures for advertising directly related to used vehicle sales.

2. The monthly write-off of the expired portion of prepaid advertising directly related to used vehicle sales.

CREDIT with:

1. The amount of advertising credits /

assistance monies established by the manufacturer under the current prevailing assistance program rules and guidelines. Example might be rebates or refunds from dealer advertising associations.

CAUTION: This account should include advertising for the express purpose of promoting used vehicles sales only.

Dealer Group Funds billed on used vehicle invoices from the factory should not be charged to this account.

Procedure:

This account includes advertising expenses related to internet advertising campaigns only and cost of owner registration lists.



Advertising expenses related to newspaper, television, radio, magazine and direct mail should be charged to Advertising - Print, TV, Other - Used, Account 329.

(2/18)


FCA 4-22E

SERVICE DEPT. Account 340-A

SALARIES, WAGES AND INCENTIVES – MECHANICAL

DEBIT with:

1. The gross salaries, wages and incentives earned by all non-productive employees in the Service Department's mechanical section.

2. The month-end accrual of non-productive salaries, wages, and incentives earned in the current period, payable in a subsequent period.

Procedure:

CREDIT with:

1. The reversal of the month-end accrual of non-productive salaries, wages, and incentives earned, but not yet paid.

Personnel whose salaries, wages, and incentives should be charged to this account include:

Service Manager Service Salesmen Shop Foreman Service Clerks Dispatchers Service Porters, etc.

When an employee's time is divided, such as a working shop foreman, who spends part of his time in a supervisory capacity and the remainder in performing productive labor; or a porter who spends part of his time in a productive capacity, e.g., washing cars or on new car clean-up and the remainder performing utility jobs, the salaries and/or wages paid should be appropriately divided between the Cost of Sales (productive) account and this account.

(2/18)


FCA 4-23

SALES EXPENSES SERVICE DEPT.

Account 340-B

SALARIES, WAGES AND INCENTIVES – BODY AND PAINT

DEBIT with:

1. The gross salaries, wages and incentives earned by all non-productive employees in the Service Department's body and paint section.

2. The month-end accrual of non-productive salaries, wages, and incentives earned in the current period, payable in a subsequent period.

CREDIT with:

1. The reversal of the month-end accrual of non-productive salaries, wages, and incentives earned, but not yet paid.

CAUTION: This account should be used only by dealerships having their own body and paint operation.

Procedure:


Body Shop Manager Body Shop Foreman Estimator Body Shop Porters Body Shop Clerks

When an employee's time is divided, such as a working shop foreman, who spends part of his time in a supervisory capacity and the remainder in performing productive labor; or a porter who spends part of his time in a productive capacity, e.g., polishing cars and the remainder performing utility jobs, the salaries and/or wages paid should be appropriately divided between the Cost of Sales (productive) account and this account.


FCA

(2/18)


Account 341-A

VACATION AND TIME-OFF PAY – MECHANICAL

DEBIT with:

1. The gross wages paid all productive mechanical technicians for:

A. Vacations B. Sick leave C. Holiday pay D. Absence while attending training schools,

etc. 2. The monthly accrual for vacation and time-off

pay for productive mechanical technicians.

CREDIT with:

1. Any adjustments necessary for accurately accruing this expense.

CAUTION: This account should include only the vacation and time-off expense applicable to productive mechanical technicians. Vacation and time-off pay for other personnel should be charged to their appropriate salary, wages, or commissions expense account.

Procedure:

Where productive mechanical personnel are represented by a bargaining agent (Union), vacation and time-off pay should be accrued and paid in accordance with the terms of the contractual agreement.

The liability for earned vacation pay chargeable to this account may be accrued monthly in order to spread the expense over the year. The offsetting entry to record the accrual for vacation and time-off pay should be credited to Accrued Vacation and Time-Off-Pay, Account 210-B.

(2/18)


FCA 4-25


Account 341-B

VACATION AND TIME-OFF PAY – BODY AND PAINT

DEBIT with:

1. The gross wages paid all productive body shop personnel for:

A. Vacations B. Sick leave C. Holiday pay D. Absence while attending training schools,

etc. 2. The monthly accrual for vacation and time-off

pay for productive body shop personnel.

CREDIT with:

1. Any adjustments necessary for accurately accruing this expense.

CAUTION: This account should include only the vacation and time-off expense applicable to productive Body Shop personnel. Vacation and time-off pay for other personnel should be charged to their appropriate salary, wages, or commissions expense account.

This account should be used only by dealerships having their own body and paint operation.

Procedure:

Where productive body shop personnel are represented by a bargaining agent (Union), vacation and time-off pay should be accrued and paid in accordance with the terms of the contractual agreement.

The liability for earned vacation pay chargeable to this account may be accrued monthly in order to spread the expense over the year. The offsetting entry to record the accrual for vacation and time-off pay should be credited to Accrued Vacation and Time-Off Pay, Account 210-B.


FCA

(2/18)


Account 342-A

PERSONNEL TRAINING – MECHANICAL

DEBIT with:

1. The expense of training mechanical service personnel.

CREDIT with:

CAUTION: Salaries and wages earned by mechanical personnel under a training program should not be charged to this account, but, should be charged to the appropriate salary and wage, or time-off account.

Procedure:


Master Technicians Programs for mechanics Service Club Memberships Expense of attending Service Club meetings (includes transportation, meals, and lodging) Technical training school fees Expense of attending Technical training schools (includes transportation, meals, and lodging)

For financial statement reporting, the balance in this account should be combined with the balance in Account 343-A.

(2/18)


FCA 4-27


Account 342-B

PERSONNEL TRAINING – BODY AND PAINT

DEBIT with:

1. The expense of training body shop personnel.

CREDIT with:

CAUTION: Salaries and wages earned by body shop personnel under a training program should not be charged to this account, but, should be charged to the appropriate salary and wage, or time-off account.

This account should be used only by dealerships having their own body and paint operation.

Procedure:


Service Club Memberships Expense of attending Service Club meetings (includes transportation, meals and lodging) Body Shop training school fees Expense of attending Body Shop training schools (includes transportation, meals and lodging)

For financial statement reporting, the balance in this account should be combined with the balance in Account 343-B.


FCA

(2/18)


Account 343-A

ADVERTISING – MECHANICAL

DEBIT with:

1. The expense of all advertising and sales promotional programs for the express purpose of promoting mechanical service sales.

CREDIT with:

CAUTION: This account should include only those charges for advertising directly related to the promoting of Service Department Programs.

Control of these expenses may be affected through the use of Purchase Orders.

Procedure:

This account includes such advertising expenses as newspaper, television, radio, magazine, direct mail (including postage), and cost of owner registration lists. Consideration should be given to booking discounts for dealership coupons redeemed by customers for discounted labor and parts into this account.

Consider breaking out methods of advertising into separate sub-accounts, this is a tool to track where the money is going and the benefits from such expenses. Care should be exercised to assure that all advertising expenses are charged to the appropriate Profit Center.

For financial statement reporting, the balance in this account should be combined with the balance in Account 342- A.

(2/18)


FCA 4-29


Account 343-B

ADVERTISING – BODY AND PAINT

DEBIT with:

1. The expense of all advertising and sales promotional programs for the express purpose of promoting body shop sales.

CREDIT with:

CAUTION: This account should include only those charges for advertising directly related to the promoting of body shop sales.


This account should be used only by dealerships having their own Body and Paint operation.

Procedure:


Yellow pages advertising Newspaper Radio Television

Care should be exercised to assure that all advertising expenses are charged to the appropriate Profit Center.

For financial statement reporting, the balance in this account should be combined with the balance in Account 342- B.


FCA

(2/18)


Account 344-A

SUPPLIES, TOOLS AND LAUNDRY – MECHANICAL

DEBIT with:

1. The cost of supplies and small tools purchased for use in the Service Department - Mechanical.

2. The rental expense of all service uniforms, shop coats, coveralls, car covers, towels, wiping rags, etc.

3. The laundry service for cleaning uniforms, etc.

4. Freight, express, and postage expenses on merchandise sold by the Service Department.

CREDIT with:

CAUTION: Control of these expenditures may be effected through the use of Purchase Orders.

Procedure:


Small wrenches Shop towels, shop coats, coveralls and wiping cloths Hand drills Protective coverings for vehicles Drill bits Welding gases Hammers Chamois Mallets Sweeping compounds Chisels Freight and express charges on gas, oil and Screwdrivers lubricants, etc. Solvents Data processing used by the Mechanical Shop

Small tools are normally considered to be of an expendable nature. "Basic Tools" and "Prior Years' Model Tools" are considered as "Special Tools" and are not classified as small tools inasmuch as they are designed to perform a specific or special function. As validated by the Service activity of FCA, special tools become of more serviceable use as they get older. Therefore, Basic Tools, Prior Years' Model Tools and other Special Tools should be charged to Service Equipment, Account 162-A, and depreciated over their useful lives. If special tools are expensed at the time of purchase, they have a tendency to lose their accountability. Since they are normally costly items, the asset account provides the necessary accountability control.

(2/18)


FCA 4-31


Account 344-B

SUPPLIES, TOOLS AND LAUNDRY – BODY AND PAINT

DEBIT with:

1. The cost of supplies and small tools purchased for use in the Body Shop.

2. The rental expense of all uniforms, shop coats, coveralls, car covers, towels, wiping rags, etc. used by the Body Shop.


4. Freight, express and postage expenses on body and paint shop materials sold by the Body Shop.

CREDIT with:

CAUTION: Control of these expenditures may be effected through the use of Purchase Orders.


Procedure:


Small wrenches Shop towels, shop coats, coveralls and wiping cloths Hand drills Protective coverings for vehicles Drill bits Welding gases Hammers Chamois Mallets Sweeping compounds Chisels Freight and express charges on body and paint shop Screwdrivers materials, etc. Solvents Data processing used by the Body Shop

Small tools are normally considered to be of an expendable nature. "Basic Tools" and "Prior Years' Model Tools" are considered as "Special Tools" and are not classified as small tools inasmuch as they are designed to perform a specific or special function. As validated by the Service activity of FCA, special tools become of more serviceable use as they get older. Therefore, Basic Tools, Prior Years' Model Tools and other Special Tools should be charged to Service Equipment, Account 162-A, and depreciated over their useful lives. If special tools are expensed at the time of purchase, they have a tendency to lose their accountability. Since they are normally costly items, the asset account provides the necessary accountability control.


FCA

(2/18)


Account 345-A

VEHICLE EXPENSE – MECHANICAL

DEBIT with:

1. The expense of operation and maintenance of:

CREDIT with:

A. Wreckers B. Service Manager's company owned car. C. Service trucks

Procedure:

The expense of operating and maintaining "Executive Cars," "Courtesy Cars," and "Loaners" should not be charged to this account, but should be charged to Company Car Expense, Account 372.


Gas and oil Lubricating and washing Polishing License and title fees Sales and use taxes Safety inspections (vehicle stickers) Repairs Physical damage losses resulting from accidents (uninsured portion) Depreciation expense Finance charges

The offsetting entry for accumulating the monthly provision for depreciation of vehicles should be credited to Depreciation of Company Cars and Service Vehicles, Account 164-B.

It is recommended that all charges to this account be classified, as to type, on the Distribution Sheet, Form DUAS- 466. This procedure will facilitate reconciliation of such expenses as depreciation, etc.

(2/18)


FCA 4-33


Account 345-B

VEHICLE EXPENSE – BODY AND PAINT

DEBIT with:


CREDIT with:

A. Wreckers B. Body shop trucks C. Body Shop Manager's company owned car.

CAUTION: This account should be used only by dealerships having their own Body and Paint operation.

Procedure:

The expense of operating and maintaining "Executive Cars," "Courtesy Cars," and "Loaners should not be charged to this account, but should be charged to Company Car Expense, Account 372.




It is recommended that all charges to this account be classified, as to type, on a Distribution Sheet. This procedure will facilitate reconciliation of such expenses as depreciation, etc.


FCA

(2/18)


Account 346-A

POLICY ADJUSTMENTS – MECHANICAL

DEBIT with:

1. The internal selling price for all labor and sublet repairs or adjustments of service work which was previously sold by the Service Department (for which the customer or manufacturer is not charged).

2. Labor and sublet portion of shortages on Warranty Service Claims - Mechanical.

3. Labor and sublet portion of denied Warranty Service Claims - Mechanical.

CREDIT with:

1. The labor and sublet overages on Warranty Service Claims – Mechanical paid by the manufacturer.

CAUTION: The dealer should review all charges to this account with the service manager each month.

Procedure:

Service policy adjustments should only be approved or authorized by the Service Manager.

Warranty Service Claim overages or shortages should be investigated to determine the cause of the variance. Such overages or shortages, if significant, should be reviewed with the Dealer, the Service Manager, and the Parts Department Manager.

Denied Warranty Service Claims should be thoroughly investigated to determine the cause for denial. Reasons for denial should be clearly noted on the claim. Denied claims should always be approved by the dealer prior to their write-off to this account.

(2/18)


FCA 4-35


Account 346-B

POLICY ADJUSTMENTS – BODY AND PAINT

DEBIT with:

1. The internal selling price for all labor and sublet repairs or adjustments of Body and Paint work which was previously sold by the Body Shop (for which the customer or manufacturer is not charged).

2. Body and Paint labor and sublet Body and Paint portion of shortages on Warranty Service Claims paid.

3. Body and Paint labor and sublet Body and Paint portion of denied Warranty Service Claims.

CREDIT with:

1. The Body and Paint labor and sublet Body and Paint overages on Warranty Service Claims paid by the manufacturer.

CAUTION: The dealer should review all charges to this account with the Body Shop Manager each month.


Procedure:

Body and Paint policy adjustments should only be approved or authorized by the Body Shop Manager.

Warranty Service Claim overages or shortages relating to the body shop should be investigated to determine the cause of the variance. Such overages or shortages, if significant, should be reviewed with the Dealer, the Body Shop Manager, and the Parts Department Manager.



FCA

(2/18)


Account 348-A

DEPRECIATION OF EQUIPMENT – MECHANICAL

DEBIT with:

1. The monthly provision for depreciation of Service Department equipment – Mechanical.

Procedure:

CREDIT with:

Rates of depreciation vary according to the type of equipment, use, and other factors. Tax counsel should be obtained before adopting depreciation methods and rates. Governmental tax authorities issue guidelines containing allowable depreciation methods and rates.

The offsetting entry to record the monthly provision for depreciation of this equipment should be credited to Depreciation of Service Equipment, Account 162-B.

The Fixed Asset – Inventory and Depreciation Record, Form DUAS-367, should be accurately and currently maintained.

The depreciation of electronic data processing equipment should be charged to Data Processing Services, Account 374.


(2/18)


FCA 4-37


Account 348-B

DEPRECIATION OF EQUIPMENT – BODY AND PAINT

DEBIT with:

1. The monthly provision for depreciation of Service Department equipment – Body and Paint.

CREDIT with:

CAUTION: This account should be used only by dealerships having their own Body and Paint operation.

Procedure:


The offsetting entry to record the monthly provision for depreciation of this equipment should be credited to Depreciation of Service Equipment, Account 162-B.


The depreciation of electronic data processing equipment should be charged to Data Processing Services, Account 374.



FCA

(2/18)


Account 349-A

MAINTENANCE, REPAIR AND RENTAL OF EQUIPMENT – MECHANICAL

DEBIT with:

1. All expenses incurred for the maintenance and repairs of service equipment – Mechanical.

2. The expense of renting or leasing service equipment – Mechanical.

CREDIT with:

CAUTION: Maintenance and repair costs are those which normally do not add to the value or prolong the life of the asset.


Procedure:

Maintenance and repair charges to this account should include both customer labor and parts used, outside vendor charges for repair services rendered, and machinery and equipment maintenance contracts.

Some equipment lease agreements are in effect installment purchases rather than bona fide lease contracts; therefore, the dealership must look to the substance of the agreement rather than its form. Equipment purchased on a lease-purchase arrangement should be recorded in Service Equipment, Account 162-A. Such equipment should then be depreciated over its anticipated useful life. The liability for a lease-purchase agreement should also be recorded. Subsequent payments would then be charged against the liability account.

The maintenance, repair and rental of electronic data processing equipment should be charged to Data Processing Services, Account 374.


(2/18)


FCA 4-39


Account 349-B

MAINTENANCE, REPAIR AND RENTAL OF EQUIPMENT – BODY AND PAINT

DEBIT with:

1. All expenses incurred for the maintenance and repairs of service equipment – Body and Paint.

2. The expense of renting or leasing service equipment – Body and Paint.

CREDIT with:




Procedure:


Some equipment lease agreements are in effect installment purchases rather than bona fide lease contracts; therefore, the dealership must look to the substance of the agreement rather than its form. Equipment purchased on a lease-purchase arrangement should be recorded in Service Equipment, Account 162-A. Such equipment should then be depreciated over its anticipated useful life. The liability for a lease-purchase agreement should also be recorded. Subsequent payments would then be charged against the liability account.

The maintenance, repair and rental of electronic data processing equipment should be charged to Data Processing Services, Account 374.



FCA

(2/18)

SALES EXPENSES PARTS DEPT. Account 350

SALARIES, WAGES, AND INCENTIVES


1. The gross salaries, wages, and incentives earned by all employees in the Parts Department.

2. The month-end accrual of salaries, wages, and incentives earned in the current period, payable in a subsequent period.

Procedure:

1. The reversal of the month-end accrual of salaries, wages, and incentives earned, but not yet paid.


Parts Department Manager Parts Salesmen Parts Clerks Parts Truck Drivers Parts Wholesale Salesmen

In the event that an employee spends only a portion of his time in the Parts Department, that portion of time spent should be charged to this account, the remainder of his time should be charged to the applicable account affected.

(2/18)


FCA 4-41


PERSONNEL TRAINING


1. The expense of training parts personnel.

CAUTION: Salaries and wages earned by personnel under a training program should not be charged to this account, but, should be charged to the appropriate salary and wage account.

Procedure:


Parts Club Memberships Expense of attending Parts Club meetings (includes transportation, meals, and lodging) Technical training school fees Expense of attending Technical training schools (includes transportation, meals, and lodging)

For financial statement reporting, the balance in this account should be combined with the balance in Account 353.


FCA

(2/18)

SALES EXPENSES PARTS DEPT. Account

ADVERTISING 353


1. The expense of all advertising and sales promotional programs for the express purpose of promoting parts sales.

CAUTION: This account should include only those charges for advertising directly related to the promoting of Parts Department Programs.


Procedure:

This account includes such advertising expenses as newspaper, television, radio, magazine, direct mail (including postage), and cost of owner registration lists. Consideration should be given to booking discounts for dealership coupons redeemed by customers for discounted labor and parts into this account.

Consider breaking out methods of advertising into separate sub accounts, this is a tool to track where the money is going and the benefits from such expenses. Care should be exercised to assure that all advertising expenses are charged to the appropriate Profit Center.


(2/18)


FCA 4-43


SUPPLIES, TOOLS, AND LAUNDRY


1. The cost of supplies and small tools purchased for use in the Parts Department.

2. The rental expense of all parts uniforms, shop coats, towels, wiping rags, etc.


CAUTION: See Account 201-C relative to employees' payroll deductions.

Control of these expenditures may be affected through the use of Purchase Orders.

Procedure:


Solvents and sweeping compounds Shop coats, coveralls, towels, wiping rags, etc. Bailing, strapping, shipping and packing tools Tote pans, metal baskets, picking carts, etc. Parts inventory control systems and services (card decks, trays) Physical inventory services (performed by outside vendors) Data processing used by the Parts Department

An accurate method of payroll deductions for such items as uniforms and laundry service should be established. Such deductions are controlled more effectively if they are cleared through a payable account.


FCA

(2/18)


FREIGHT, EXPRESS, AND SHIPPING


1. The total expense of freight, cartage, express, and postage on all incoming and outgoing shipments of parts, accessories, and other miscellaneous merchandise sold by the Parts Department.

1. The amount of collections and allowances that offset such freight, cartage, express, and postage charges.

CAUTION: Freight costs applicable to vehicles, capital assets, and non-inventory items should be charged to the appropriate account together with the original purchase, not to this account.

Procedure:

The freight costs applicable to parts and accessories receipts should not be charged to the respective inventory account as this will distort the inventory and cause sizeable inventory adjustments when the physical count is reconciled to the book balance.

(2/18)


FCA 4-45


POLICY ADJUSTMENTS


1. The internal selling price for all adjustments or replacements of parts and accessories previously sold by the Parts Department (for which the customer or manufacturer is not charged).

2. Parts portion of shortages on Warranty Service Claims paid.

3. Parts portion of denied Warranty Service Claims.

1. The parts portion of overages on Warranty Service Claims paid by the manufacturer.

CAUTION: The dealer should review all charges to this account with the parts manager each month.

Procedure:

Parts policy adjustments should only be approved or authorized by the Parts Department Manager.

Warranty Service Claim overages or shortages should be investigated to determine the cause of the variance. Such overages or shortages, if significant, should be reviewed with the Dealer, the Service Manager, and the Parts Department Manager.



FCA

(2/18)


VEHICLE EXPENSE



A. Parts trucks B. Parts Manager's company owned car. C. Wholesale Parts Salesmans' vehicles.

Procedure:

The expense of operating and maintaining "Executive Cars," "Courtesy cars," and "Loaners" should not be charged to this account, but should be charged to Company Car Expense, Account 372.





(2/18)


FCA 4-47


DEPRECIATION – EQUIPMENT


1. The monthly provision for depreciation of Parts Department equipment.

Procedure:


The offsetting entry to record the monthly provision for depreciation of this equipment should be credited to Depreciation of Parts and Accessories Equipment, Account 163-B.


The depreciation of all electronic data processing equipment should be charged to Data Processing Services, Account 374.



FCA

(2/18)


MAINTENANCE, REPAIR AND RENTAL – EQUIPMENT


1. All expenses incurred for the maintenance and repairs of parts equipment.

2. The expense of renting or leasing parts equipment.



Procedure:


Seek counsel as to recording as an operating vs capital lease.

The maintenance, repair and rental of all electronic data processing equipment should be charged to Data Processing Services, Account 374.


(2/18)


FCA 4-49

FIXED EXPENSES Account 362

SALARIES AND WAGES – ADMINISTRATIVE AND GENERAL

DEBIT with:

1. The gross salaries and wages earned by all administrative and general employees.

2. The month-end accrual of salaries, wages, and incentives earned in the current period, payable in a subsequent period.

CREDIT with:

1. The reversal of the month-end accrual of salaries, wages, and incentives earned, but not paid.

CAUTION: Care should be exercised to assure that salaries, wages, and incentives are properly charged to the appropriate Profit Center account.

Procedure:

Personnel whose salaries and wages should be charged to this account include:

General Manager Customer Relations Manager Business Manager Office Manager Accountants and bookkeepers Secretaries and stenographers Cashiers Clerks Telephone Operators Janitors Watchmen Porters Temporary help, etc.

Vacation and time-off pay to above personnel should also be charged to this account.

Bonuses exceeding the agreed upon compensation should not be charged to this account. (Refer to Account 704.)


FCA

(2/18)


EMPLOYEE BENEFITS

DEBIT with:

1. The total expense for fringe benefit programs instituted for the sole benefit of employees.

CREDIT with:

1. Any amount of overpayment connected with pension and retirement plans, etc.

CAUTION: In most employee benefit programs, the employees and the dealership share in the expenses of the program. Only the dealership's portion of the expense is to be charged to this account.

Refer to Account 201-C regarding employees' payroll deduction authorization.

Procedure:

Employee benefit programs that normally should be charged to this account include:

Life insurance Hospitalization insurance Sickness and accident insurance Pension and retirement plans (Refer to Account 217-C) Welfare and recreation funds Workmen's compensation insurance

An accurate method of payroll deductions for such items as insurance and pension contributions should be established. Such deductions are controlled more effectively if they are cleared through a payable account.

(2/18)


FCA 4-51

FIXED EXPENSES Account

PAYROLL TAXES 365

DEBIT with:

1. All taxes assessed on employees' wages (employer portion only).

CREDIT with:

CAUTION: Current applicable tax rates should be used in computing the employee and employer tax liability.

Procedure:

Individual employee earnings records should be currently maintained to facilitate the proper payroll deductions and permit accurate employer tax liability accrual.

Payroll taxes that should be charged to this account include:

F.I.C.A. taxes Federal Unemployment taxes State Unemployment taxes Local Employment taxes, if any


FCA

(2/18)


ADVERTISING – GENERAL AND INSTITUTIONAL

DEBIT with:

1. The expenditures for advertising that generally promote or benefit the dealership as a whole.

CREDIT with:

CAUTION: This account should not include advertising expenses directly related and applicable to the promotion of vehicle, service, body shop and parts sales.

Procedure:

Charges to this account include such items as:

Direct mail advertising (including postage) Goodwill ads Employment ads Team sponsorship (for local sport activities) Telephone yellow pages Driver Education Vehicle expenses Billboards – roadside signs

DRIVER EDUCATION VEHICLES

For additional accounting instructions refer to the description of Driver Education Vehicles, Account 155-A.

All driver training car expenses incurred by the dealership, which are not chargeable to and paid by the school to which the training unit is assigned, should be charged to this account. It is recommended that Distribution Sheet, Form DUAS-466, be used to categorize the various types of expenses charge.

Driver training expenses will include:

1. Dual driving equipment installation or removal costs (asset value of equipment, factory or dealer installed,

should be charged to Driver Education Vehicles, Account 155-A). 2. Decal removal and panel reconditioning costs. 3. Finance charges. 4. License and title fees. 5. Sales tax. 6. Used vehicle inventory difference, if any, between net value and current wholesale value (upon removal

from service). 7. Other non-reimbursable items.

(2/18)


FCA 4-53


STATIONERY, OFFICE SUPPLIES, AND POSTAGE

DEBIT with:

1. The cost of all office supplies. 2. The cost of postage for general usage.

CREDIT with:

1. The reimbursement amount (Credit) allowed by the factory on the Dealer Warranty Claim Statements for claim forms processed.

CAUTION: Proper methods of control should be established to minimize waste and unnecessary expense. Control of these expenses may be affected through the use of Purchase Orders.

NOTE: Postage used in connection with direct-mail advertising should be expensed to the

appropriate advertising account.

Where mailing volume warrants, the use of a postage meter is suggested.

Procedure:

Typical charges (including freight and sales tax) to this account include such items as:

Stationery Invoices Repair orders Accounting forms General office supplies Rental expense of postage equipment

Documents such as parts counter sales invoices, repair orders, sales invoices, purchase orders, checks, etc. should be controlled inasmuch as they can be misused with costly results.

Pre-numbered documents should be used in numerical sequence. Check-off sheets should be maintained for all pre-numbered documents. Those that do not clear in their normal sequence, or that may be outstanding longer than usual, should be investigated and their disposition determined.

Pre-numbered documents that may be voided should be recorded in their respective journal within their numerical sequence, and should be indicated as having been void on all copies of the document, in the journal, and on the check-off sheet. It is recommended that voided documents be filed intact within their numerical sequence.

Stationery and office supplies are normally expensed at the time of purchase; however, when purchases are made in lot quantities (for extended periods of time) these expenses should be set up as a prepaid expense and prorated over the estimated period.


FCA

(2/18)

FIXED OVERHEAD Account 370

LEGAL, AUDITING, AND COLLECTION EXPENSE

DEBIT with:

1. The expense incurred for legal, auditing, tax service, and collection agency fees, including court costs.

2. The monthly accrual of estimated legal and audit fees.

CREDIT with:

CAUTION: Monthly accounting services to close the books and prepare the financial statement should be charged to Other Outside Services, Account 371.

Electronic accounting services should be charged to Data Processing Services, Account 374.

Procedure:


Professional legal counsel Auditing services of an outside firm Collection agency fees Court costs and filing fees Notary bonds and seals Contracts for credit cards and discounts for collection Credit reports Monthly credit card processing/service fees

When legal, auditing, or collection expense is paid in advance, the amounts should be debited to Prepaid Expenses – Other, Account 145-F, and charged to expense on a monthly basis.

Normally, the annual outside audit fee should be determined and accrued on a monthly basis.


(2/18)


FCA 4-55


OTHER OUTSIDE SERVICES

DEBIT with:

1. The costs of outside services other than legal, audit, and collection.

CREDIT with:

CAUTION: This account should not include salaries or wages of dealership personnel.

Procedure:

The costs of the following outside services should be charged to this account:

Monthly accounting services and statement preparation Armored car service Police protection Shopper's services Management services and surveys Messenger services Alarm systems Rubbish removal service (including waste oil and scrap metal) Snow removal Safe deposit rentals Outside janitor service Guard dog service

The above services should not be charged to this account if they are performed by dealership personnel.

Electronic accounting services should be charged to Data Processing Services, Account 374.



FCA

(2/18)


COMPANY CAR EXPENSE

DEBIT with:

1. The operation and maintenance expense of vehicles placed in general company use and service.

CREDIT with:

1. Amount of charges, or surcharges, made on Courtesy Cars, Loaners, etc.

CAUTION: The expense of operating and maintaining service, body and paint and parts vehicles should not be charged to this account, but should be charged to Service, Body and Paint and Parts Vehicle Expenses, Accounts 345-A, 345-B and 357.

Courtesy Cars and Loaners exclude vehicles which are primarily revenue producing (refer to Manual Section 7-Leasing). However, if a customer is occasionally charged a nominal amount, with no contractual obligations, this should not be construed as primarily revenue producing.

Procedure:

This account should include the operation and maintenance expense of "Executive Cars," "Courtesy Cars," "Loaners," and any expense allowance to dealership personnel for the use of their personal cars in the business.

Charges to this account should include such items as:

Gas and oil Lubricating and washing Polishing License and title fees Sales and use taxes Safety inspections (vehicle stickers) Repairs Physical damage losses resulting from accidents (uninsured portion) Depreciation expense Finance charges Insurance premiums

The offsetting entry for accumulating the monthly provision for depreciation of company cars should be credited to Depreciation of Company Cars and Service Vehicles, Account 164-B.


(2/18)


FCA 4-57


DUES, SUBSCRIPTIONS, AND CONTRIBUTIONS

DEBIT with:

1. The amount of initiation fees and dues paid to business and civic organizations.

2. The amount of subscriptions paid for periodicals, business, and trade publications.

3. The amount of money and items of value contributed to charitable, educational, and religious institutions.

CREDIT with:

CAUTION: Subscription lists should be reviewed periodically to ascertain that all expenditures are warranted and beneficial to dealership activities.


Procedure:

Dues should include such expenditures for membership to:

Automobile Dealer Associations Business and Civic Organizations

Subscriptions should include such items as:

Automotive News and other trade publications Used Car and Truck Price Guides Parts Guide books, price bulletins and catalogues Auction Reports Newspapers Magazines

Contributions should include such institutions and organizations as:

Community Funds Educational Institutions Religious Institutions


FCA

(2/18)


DATA PROCESSING SERVICE

DEBIT with:

1. The expense of electronic data processing.

CREDIT with:

CAUTION: Supplies for "In-House" data processing equipment, such as paper, accounting forms, etc., should not be charged to this account, but should be charged to Stationery, Office Supplies and Postage, Account 368.

The earnings of data processing personnel should be charged to Salaries and Wages-Administrative and General, Account 362.

Data processing, used exclusively by or directly attributable to a department, should be charged to that department's expense. (See Accounts 303, 323, 344A, 344B, and 354).

Procedure:

Data processing expenses that would be charged to this account include:

Depreciation of dealership owned data processing equipment. Repair of dealership owned data processing equipment. Rental and/or lease of data processing equipment. Telephone expenses directly related to data processing equipment operation. The cost of program writing. Electronic Accounting services (including payroll preparation).

Large payments made for programming of "In-House" computers should be debited to Prepaid Expenses: Other, Account 145F. The monthly write-off of such prepaid expenses would be to this account.

Seek advice from accountant/CPA for treatment of data processing equipment depreciation.

(2/18)


FCA 4-59


TRAVEL and ENTERTAINMENT

DEBIT with:

1. The general travel and entertainment expense for business purposes.

CREDIT with:

CAUTION: Specific information relating to each expenditure is required for income tax purposes. Complete supporting evidence must be available for tax inspection, if requested.

Travel expense of personnel attending training schools should be charged to the appropriate personnel training account.

Procedure:

All travel and entertainment expenditures should be supported by an expense voucher, properly documented, indicating (in detail) dates involved, destination of travel, purpose of the trip, names of persons entertained, and other pertinent information.

It is recommended that the dealership obtain outside accounting and tax counsel relating to the proper handling of travel and entertainment expense.

Separate into sub-accounts-one for travel and one for entertainment. Travel is 100% deductible and entertainment deduction is limited. If not broken out the total expense is treated as limited.


FCA

(2/18)


BAD DEBTS 378

DEBIT with:

1. The month-end adjustment to increase the bad debts provision in the Allowance for Doubtful Accounts.

CREDIT with:

1. The month-end adjustment to decrease the bad debts provision in the Allowance for Doubtful Accounts.

CAUTION: Proper credit investigation and approval may minimize potential bad debt losses.

Procedure:

Where accounts are collected by a credit and collection agency, the portion of the account that is retained by such agency should be charged to Legal, Auditing, and Collection Expense, Account 370. The total amount collected should be credited to the individual's account.

(2/18)


FCA 4-61


MISCELLANEOUS 380

DEBIT with:

1. Expenditures for which specific accounts have not been provided.

Procedure:

CREDIT with:

Expenses charged to this account should be relatively few in number. However, the following expenses are directly applicable to this account:

Dealer Management schools (includes transportation, meals, and lodging) Training of administrative and clerical personnel (includes transportation, meals, and lodging) Christmas party expense Gifts such as turkeys, hams, etc. Congratulatory gifts Flowers Employee overtime meals

It is recommended a Distribution Sheet be used to detail the various types of charges to this account. The Distribution Sheet should be inserted directly following the General Ledger Sheet for this account.


FCA

(2/18)


INTEREST ON MORTGAGE

DEBIT with:

1. All interest, paid or accrued, on mortgages payable (secured by real estate used in the automotive business).

Procedure:

CREDIT with:

For financial statement reporting, the balance in this account should be combined with the balances in Accounts 382, 383, 384, 385 and 386.

(2/18)


FCA 4-63


RENT 382

DEBIT with:

1. Expense of renting/leasing all facilities used in the regular dealership activities.

CREDIT with:

1. Income received from subletting or renting a portion of the facilities.

CAUTION: Where the terms of a lease require the lessee to pay any real estate taxes and/or insurance coverage, such amounts should be considered a part of the rental factor and charged to this account.

Procedure:

Charges to this account should include such expenditures as:

Rental for buildings Rental for used vehicle lots Rental for new and used vehicle storage facilities Insurance – if specified in the terms of the lease Real estate taxes – if specified in the terms of the lease



FCA

(2/18)


AMORTIZATION OF LEASEHOLDS

DEBIT with:

1. That portion of cost for leaseholds and improvements amortized monthly.

CREDIT with:

CAUTION: Leasehold improvements are normally construed to mean those improvements of a permanent nature that add value and/or life to the property.

Procedure:

Leasehold improvements should be amortized over the expected life of the improvement, or the remaining period of the lease, whichever is less.

A premium paid for a lease should be amortized over the term of the lease.

It is recommended that the dealer obtain outside accounting and tax counsel to aid him in establishing proper accounting and amortization of leaseholds.


(2/18)


FCA 4-65


DEPRECIATION – BUILDINGS AND BUILDING EQUIPMENT

DEBIT with:

1. That portion of cost for buildings and building equipment chargeable to expense monthly.

CREDIT with:

CAUTION: Rates of depreciation vary according to the type of building and building equipment and their useful life expectancy.

Procedure:

All buildings, building equipment, and improvements should be listed in detail on the Fixed Asset – Inventory and Depreciation Record, Form DUAS-367. The total amount listed in the "Amount of Reserve Per Month" column should agree with the amount expensed in this account each month.

The Fixed Asset – Inventory and Depreciation Record, Form DUAS-367, should be used to permit an accurate depreciation write-off.



FCA

(2/18)


TAXES – REAL ESTATE

DEBIT with:

1. The monthly portion of all prepaid or accrued taxes on real estate owned by the dealership and used in its regular activities.

CREDIT with:

CAUTION: Real estate taxes paid on rented property are considered as a part of the rent factor and should be charged to Rent, Account 382.

Procedure:

Real estate taxes are usually distributed over a twelve month period. Such taxes should be prepaid or accrued in accordance with tax regulations.

Real estate taxes normally consist of:

City taxes County taxes School district taxes Improvement assessments


(2/18)


FCA 4-67


INSURANCE – REAL ESTATE

DEBIT with:

1. The monthly portion of all insurance premiums for insurance coverage on all buildings and building equipment owned by the dealership, and used in regular dealership activities.

CREDIT with:

CAUTION: Insurance premiums should be charged to Prepaid Insurance, Account 145-B, and the premium amortized monthly over the life of the policy.

Insurance on rented property is considered as part of the rent factor and should be charged to Rent, Account 382.

All insurance policies should be reviewed periodically for duplicate or unneeded coverage.

Procedure:

Typical charges to this account include real estate insurance coverage for:

Fire Tornado Plate glass Boiler Extended coverage



FCA

(2/18)


MAINTENANCE AND REPAIRS – REAL ESTATE

DEBIT with:

1. The expense incurred in maintaining and repairing both owned and leased property used in the dealership activities.

CREDIT with:

CAUTION: Maintenance and repair costs are those that ordinarily do not add to the value or prolong the life of the asset.

Procedure:


Repairs to property Painting and decorating General cleaning, including major cleaning Janitor supplies Building maintenance supplies Washing windows and walls Buffing, sanding, and polishing floors Losses from glass breakage or damage to buildings (uninsured portion)

Major cleaning and decorating should be expensed at the time it is incurred, unless it materially increases the value and prolongs the life of the asset. If the cost is capitalized, it should be charged to Buildings and Building Equipment, Account 161-A, or to Leaseholds, Account 166-A, whichever is applicable.

The cost should then be properly listed on the Fixed Asset – Inventory and Depreciation Record, Form DUAS-367, and amortized over the period of life expectancy or the remaining life of the lease, whichever is the lesser period.

(2/18)


FCA 4-69


INTEREST – (OTHER THAN FLOOR PLAN AND MORTGAGE)

DEBIT with:

1. All interest, paid or accrued, other than Floor Plan and Mortgage.

Procedure:

CREDIT with:

This account should include interest charged the dealership on such items as:

Notes payable Other notes and contracts Tax delinquencies Etc.


FCA

(2/18)


INSURANCE – (OTHER THAN REAL ESTATE)

DEBIT with:

1. All insurance premiums not otherwise provided in the Chart of Accounts.

CREDIT with:

CAUTION: Premiums for Workmen's Compensation should be charged to Employee Benefits, Account 363. Premiums on life insurance (wherein the dealership is beneficiary) should be charged to Miscellaneous Deductions, Account 709.

Prepaid insurance premiums should be amortized over the life of the policy. Accrued insurance should be accrued and expensed monthly.

All insurance policies should be reviewed periodically for duplicate or unneeded coverage.

Procedure:

Premium charges to this account include such items as:

Merchandise inventories Contents and equipment Fire and theft (except buildings) Garage liability Fidelity bonds on employees Bodily injury and property damage Public liability Burglary Business interruption Other classifications

Prepaid and accrued insurance should be listed on the Prepaid and Accrued Insurance Schedule, Form DUAS- 361. The amount shown in the "Balance Column" on the Prepaid and Accrued Insurance Schedule each month should agree with the balance for the corresponding month as shown in Prepaid Insurance, Account 145-B, and Accrued Insurance, Account 213.


(2/18)


FCA 4-71


TAXES and LICENSES (OTHER THAN PAYROLL AND REAL ESTATE)

DEBIT with:

1. All other operating taxes assessed the dealership for doing business.

CREDIT with:

CAUTION: Inasmuch as states, cities, and municipalities differ considerably in the kind of taxes levied, it is impossible to list all of them. Each dealership should be careful to include those taxes in effect in its locality.

Do not include payroll, income, real estate, or excise taxes in this account.

Procedure:

Charges to this account should include taxes of a general operating nature, which are not enumerated elsewhere, such as:

Personal property taxes Intangible taxes Gross receipts taxes Sales and Use taxes – paid or due on material used or consumed (excluding all vehicles,

stationery, etc., used by the dealership) Franchise taxes (fees) Documentary Stamps (due on Stock Certificates) Customers' temporary vehicle licenses (see NOTE below)

NOTE: In those instances where the cost of temporary vehicle licenses is passed on to the customer, the

amount received should be credited to this account (also see Prepaid Taxes and Licenses, Account 145-E).



FCA

(2/18)


DEPRECIATION – (OTHER THAN BUILDINGS & BUILDING EQUIPMENT)

DEBIT with:

1. The monthly portion of depreciation of all equipment, furniture, and signs used in the dealership activities, and recorded in Furniture, Signs, and Equipment.

CREDIT with:

CAUTION: Rates of depreciation vary according to the type of equipment, use, and other factors. Tax counsel should be obtained before adopting depreciation methods and rates. Governmental tax authorities issue guidelines containing allowable depreciation methods and rates.

Procedure:

Depreciation records should be properly detailed and maintained.

The offsetting entry to accumulate the monthly provision for depreciation of equipment should be credited to Depreciation of Furniture, Signs, and Equipment, Account 165-B.

The Fixed Asset – Inventory and Depreciation Record, Form DUAS-367, should be used.

For financial statement reporting, the balance in this account should be combined with the balances in Accounts 392 and 393.

(2/18)


FCA 4-73


MAINTENANCE AND REPAIRS (OTHER THAN BUILDINGS & BUILDING EQUIPMENT)

DEBIT with:

1. The expense for maintenance and repairs to furniture, signs, and equipment used in the dealership activity.

CREDIT with:

CAUTION: Maintenance and repair costs are those which ordinarily do not add to the value or prolong the life of the asset.


Procedure:


Repairs to furniture, signs, and office equipment Maintenance to preserve the asset and to prevent future breakdown Replacement parts Equipment maintenance contracts



FCA

(2/18)


EQUIPMENT RENTAL – (OTHER THAN SERVICE AND PARTS EQUIPMENT)

DEBIT with:

1. The expense of renting or leasing: A. Office equipment B. Signs, etc., used in the regular

dealership activities.

Procedure:

CREDIT with:

Some equipment lease agreements are in effect installment purchases rather than bona fide lease contracts; therefore, the dealership must look to the substance of the agreement rather than its form. Equipment purchased on a lease-purchase arrangement should be recorded in Furniture, Signs, and Equipment, Account 165-A. Such equipment should then be depreciated over its anticipated useful life. The liability for a lease-purchase agreement should also be recorded. Subsequent payments would then be charged against the liability account.

The rental and/or lease of electronic accounting equipment should be charged to Data Processing Services, Account 374.


(2/18)


FCA 4-75


HEAT, LIGHT, POWER, AND WATER

DEBIT with:

1. The expense of fuel, electricity, gas, and water used by the dealership.

2. The month-end accrual of heat, light, power, and water.

CREDIT with:

1. The reversal of the month-end accrual.

CAUTION: Fuel purchased in quantities that will be consumed over a prolonged period (several months) should be recorded in Prepaid Expenses – Other, Account 145-F, and prorated to expense on a monthly basis.

Procedure:

The estimated expenses for fuel, electricity, gas, and water should be accrued from the last billing cut-off date or from the previous month-end to the current month-end, whichever is applicable.

For example, the utility for one month is $900.00, with the billing through the 20th. The period to accrue would be from the 21st to the end of the month, or 10 days. Therefore, the accrual would be $300.00; determined by applying the "period percentage" (10/30ths) to the billing amount ($900.00). Consideration should also be given to variances in weather and other related conditions so as to determine a realistic accrual.


FCA

(2/18)


TELEPHONE 396

DEBIT with:

1. The telephone expense. 2. The intercom system expense. 3. The month-end accrual of telephone expense.

CREDIT with:

1. The collections for personal toll calls made by individuals.

2. The reversal of the month-end accrual of telephone expense.

CAUTION: Advertising in the Yellow Pages should be charged to Advertising – General and Institutional, Account 367.

Procedure:

The estimated expense for the telephone should be accrued from the last billing cut-off date or from the previous month-end to the current month-end, whichever is applicable.

For example, this expense for one month is $600, with the billing through the 20th. The period to accrue would be from the 21st to the end of the month, or 10 days. Therefore, the accrual would be $200; determined by applying the "period percentage" (10/30ths) to the billing amount ($600).

Proper controls should be established governing toll calls. It is recommended that toll calls be verified and reviewed periodically.

Telephone expenses directly related to data processing equipment operation should be charged to Data Processing Services, Account 374.

(2/18)


FCA 4-77


SALARIES – OWNERS AND OFFICERS

DEBIT with:

1. The salaries or compensation of the proprietor, partners, or officers (of a corporation).

CREDIT with:

CAUTION: Include all owners and officers agreed upon compensation.

Bonuses exceeding the agreed upon compensation should not be charged to this account. (Refer to Account 704.)

Procedure:

To permit operating expenses to reflect a proper amount charged as a salary for managing the business, a definite monthly compensation plan should be set up for the proprietor, each partner, or each officer and their compensation charged to this account whether or not withdrawn from the business.

If not withdrawn, it can be placed to the proprietor's or partner's credit through his personal account by crediting Withdrawals, Account 285.

Corporation salaries not withdrawn should be credited to Accrued Salaries and Wages, Account 210-A.


FCA

(2/18)

NEW VEHICLE DEPARTMENT Sales: Acct. 402-A thru 443-A

Cost of Sales: Acct. 401-C thru 459-C

NEW CARS – RETAIL:

DEBIT Cost of Sales with:

1. The inventory value of all new cars sold. 2. The cost of cars and trucks sold as retail

leases, including all factory and dealer installed optional equipment and accessories.

CREDIT Sales with:

1. The gross sales price of new cars sold at retail.

2. The sales price of all retail leased cars and trucks assigned and sold to a finance institute.

CAUTION: Detailing all accessories and options on the Vehicle Inventory Record, Form DUAS-305, will facilitate correct billing and costing. All sales and cost data should be recorded on the Vehicle Inventory Record at the time of sale.

Field cars purchased from FCA are not to be handled through these accounts. Such units are sold as used cars to dealers.

Procedure:

Separate Sales and Cost of Sales Accounts are provided for each individual car line within the make of car handled by the dealership, as indicated below:

Cost Cost of of

Sales Sales New Cars - Retail: Sales Sales New Cars - Retail: 402-A 402-C Fiat – 124 Spider 411-A 411-C Alfa Romeo 4C 404-A 404-C Fiat 500 412-A 412-C TBD 2 405-A 405-C Alfa Romeo Stelvio 413-A 413-C Fiat 500E – USA Only 406-A 406-C Fiat 500 Cabrio 417-A 417-C Alfa Romeo Giulia 407-A 407-C Challenger

419-A 419-C Alfa Romeo - TBD

408-A 408-C 200 Series 4 Dr. Sedan 420-A 420-C 300 Series 409-A 409-C Charger 423-A 423-C Viper 443-A 443-C Fiat 500X

Charges made on the vehicle invoice for separate items, such as "title search fees," etc., should be included in the gross sales price of the vehicle and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expenses or as other income unless required by law. Discounts and over allowances on new car sales should be debited to the appropriate car line Discounts and Over allowances. Account 404- B thru 461-B. Cars transferred or exchanged between dealers are not to be considered as sales. They should be debited and/or credited to Account 460, Transfer Income. These transactions should be recorded in the New Vehicle Purchase Journal. Demonstrators should be handled in compliance with respective state laws. They should not be recorded as new car sales until sold to the ultimate consumer. This account would include lease sales under such plans as: FCA Financial Company LLC–Gold Key Retail Lease Finance Plan; General Electric's G.E.C.A.L; Local bank plans, etc.

USA ONLY - Beginning in 2018, FCA added a new column to page 3 of the FCA Financial Statement to capture volume incentives by model line as a MEMO only. When volume incentives credit advice is received from FCA, credit the specially designated cost of sale account each model line in the total amount of incentives earned for the period (month). This designated cost of sale account should also duplicate the entry AS A MEMO FIGURE ONLY to the memo column for each model line.

(2/18)


FCA 5-1

NEW VEHICLE DEPARTMENT Sales: Acct. 402-B thru 443-B

NEW CARS – RETAIL: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:

1. The amount of discount allowed on the retail sale of a car without a "Trade-in."

2. The amount allowed over the current wholesale value (less estimated reconditioning costs) of a used vehicle accepted in trade.

CREDIT Sales with:

CAUTION: Discounts and Over Allowances Accounts have been provided for those dealerships desiring their use for management purposes, or where use is required by law.

Procedure:

Separate Discounts and Over Allowances Accounts are provided for each individual car line with the make of car handled by the dealership, as indicated below:

SPECIAL SPECIAL VEH. INC. VEH. INC. ACCOUNT CAR LINES ACCOUNT CAR LINES

402-B Fiat – 124 Spider 411-B Alfa Romeo 4C 404-B Fiat 500 412-B TBD-2 405-B Alfa Romeo Stelvio 413-B Fiat 500E – USA Only 406-B Fiat 500 Cabrio 417-B Alfa Romeo Giulia 407-B Challenger 419-B Alfa Romeo - TBD 408-B 200 Series 4 Dr. Sedan 420-B 300 Series 409-B Charger 423-B Viper 443-B Fiat 500X

Discounts and over allowances should be charged against the appropriate car sales account in the general ledger and treated as a reduction in sales when the financial statement is prepared.



FCA

(2/18)

NEW VEHICLE DEPARTMENT Sales: Acct. 402-D thru 443-D

NEW CARS – RETAIL: SPECIAL VEHICLE INCOME


1. The amount earned in accordance with Sales/Purchase Incentive Programs applicable to the respective vehicle line.

CAUTION: Divisional Sales/Purchase Incentive Bonus Programs, including the FCA Management Employee Purchase Plan, should be studied thoroughly to assure proper understanding of the various programs and their provisions. This will facilitate proper accounting of each incentive or bonus program.

The offsetting entries are debited to Factory Receivables–Special Vehicle Income, Account 116-C or Dealer Cash/Consumer Rebates, Account 116H. Refer to the description of that account for the uniform method of recording Special Vehicle Income.

Procedure:

Separate accounts are provided for each individual car line within the make of car handled by the dealership, as indicated below:

SPECIAL SPECIAL VEH. INC. VEH. INC. ACCOUNT CAR LINES ACCOUNT CAR LINES

402-D Fiat – 124 Spider 411-D Alfa Romeo 4C 404-D Fiat 500 412-D TBD-2 405-D Alfa Romeo Stelvio 413-D Fiat 500E – USA Only 406-D Fiat 500 Cabrio 417-D Alfa Romeo Giulia 407-D Challenger 419-D Alfa Romeo - TBD 408-D 200 Series 4 Dr. Sedan 420-D 300 Series 409-D Charger 423-D Viper 443-D Fiat 500X

Units properly recorded in the New Vehicle Sales Journal, reflecting the Special Vehicle Income earned under each incentive/bonus program, may preclude the necessity of maintaining an additional receivable schedule or register. It is recommended that each new Vehicle Sales Journal sheet be properly identified, indicating each bonus level of the incentive program.

Numbering the sales within each car line in the New Vehicle Sales Journal, beginning with the first eligible unit, will permit an accurate computation of the Special Vehicle Income as each retroactive bonus level is reached.


(2/18)


FCA 5-3

NEW VEHICLE DEPARTMENT Sales: Acct. 401-A

Cost of Sales: Acct. 401-C

OTHER NEW CARS – RETAIL – MASERATI


1. The inventory value of new Maserati discontinued model new cars sold.

CREDIT Sales with:

1. The gross sales price of all Maserati discontinued model new cars sold to:

A. Retail Customers B. Fleet Customers

CAUTION: Use this account for all new car sales for Maserati discontinued models, for which a specific account has not been provided in the Chart of Accounts.

Care should be exercised when recording transfers of optional equipment and accessories between units to facilitate correct billing and costing. All sales and cost data should be recorded on the Vehicle Inventory Record, Form DUAS-305, at the time of sale.

Procedure:

Charges made on the vehicle invoice for separate items, such as "title search fees," etc., should be included in the gross sales price of the vehicle and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expenses or as other income unless required by law.

Discounts and over allowances on new car sales in these accounts should be debited to Discounts and Over allowances – Other New Cars, Maserati, Account 401-B.

Cars transferred or exchanged between dealers should be debited and/or credited (as Transfers) to Inventory New Cars – CDJR/AF/F, Account 120. These transactions should be recorded in the New Vehicle Purchase Journal.

Demonstrators should be handled in compliance with respective state laws. They should not be recorded as new car sales until sold to the ultimate consumer.


5-4 DEALER UNIFORM ACCOUNTING SYSTEM FCA (2/18)

NEW VEHICLE DEPARTMENT Sales: Acct. 401-B

OTHER NEW CARS – RETAIL – MASERATI: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:



CREDIT Sales with:


These accounts should be used in conjunction with Other New Cars – Retail – Maserati, Sales Account 401-A.

Procedure:

Discounts and over allowances on new car sales that are charged to this account should be debited against the gross sales amount in the general ledger and treated as a reduction in sales when the financial statement is prepared.

(2/18)


FCA 5-5

OTHER NEW CARS – RETAIL – MASERATI: SPECIAL VEHICLE INCOME

NEW VEHICLE DEPARTMENT Sales: Acct. 401-D


CREDIT Sales with:

1. All special income earned from the

manufacturer and/or distributor in the form of car sales and/or purchase program bonuses and allowances.

CAUTION: This account should be used in conjunction with Other New Cars – Retail – Maserati, Cost of Sales Account 401-C.

Procedure:

Sales and/or Purchase Incentive Bonus Programs should be studied thoroughly to assure proper understanding of the various programs and their provisions. This will facilitate proper accounting of each incentive or bonus program.

Units properly recorded in the New Vehicle Sales Journal, reflecting the Special Vehicle Income earned under each incentive/bonus program, will preclude the necessity of maintaining an additional receivable schedule or register of Special Vehicle Income.

It is recommended that each New Vehicle Sales Journal sheet be properly identified, indicating each bonus level of the respective incentive program.

The offsetting debit for the receivable should be made to Other Receivables, Account 114, or Special Vehicle Income, Account 116-C.




OTHER NEW CARS – RETAIL – FIAT/ALFA ROMEO


2. The inventory value of new Fiat or Alfa Romeo discontinued model new cars sold.

CREDIT Sales with:

2. The gross sales price of all Fiat or Alfa Romeo discontinued model new cars sold to:


CAUTION: Use this account for all new car sales for Fiat/Alfa Romeo discontinued models, for which a specific account has not been provided in the Chart of Accounts.


Procedure:


Discounts and over allowances on new car sales in these accounts should be debited to Discounts and Over allowances – Other New Cars, Fiat/Alfa Romeo, Account 403-B.

Cars transferred or exchanged between dealers should be debited and/or credited (as Transfers) to Inventory New Cars – CDJR/AF/F, Account 120. These transactions should be recorded in the New Vehicle Purchase Journal.



(2/18) DEALER UNIFORM ACCOUNTING SYSTEM

FCA 5-7


OTHER NEW CARS – RETAIL – FIAT/ALFA ROMEO: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:

3. The amount of discount allowed on the retail

sale of a car without a "Trade-in." 4. The amount allowed over the current

wholesale value (less estimated reconditioning costs) of a used vehicle accepted in trade.

CREDIT Sales with:


These accounts should be used in conjunction with Other New Cars – Retail – Fiat/Alfa Romeo, Sales Account 403-A.

Procedure:



NEW VEHICLE DEPARTMENT Cost of Sales: Acct. 403-D

OTHER NEW CARS – RETAIL – FIAT/ALFA ROMEO: SPECIAL VEHICLE INCOME

DEBIT Cost of Sales with: CREDIT Sales with:

1. All special income earned from the manufacturer and/or distributor in the form of car sales and/or purchase program bonuses and allowances.

CAUTION: This account should be used in conjunction with Other New Cars – Retail – Fiat/Alfa Romeo, Cost of Sales Account 403-C.

Procedure:





(2/18) DEALER UNIFORM ACCOUNTING SYSTEM 5-9

FCA



OTHER NEW CARS – RETAIL – CDJR


3. The inventory value of new Chrysler discontinued model new cars sold.

CREDIT Sales with:

3. The gross sales price of all Chrysler discontinued model new cars sold to:


CAUTION: Use this account for all new car sales for FCA discontinued models, for which a specific account has not been provided in the Chart of Accounts.


Procedure:


Discounts and overallowances on new car sales in these accounts should be debited to Discounts and Over allowances – Other New Cars, Chrysler/Fiat, Account 425-B.

Cars transferred or exchanged between dealers should be debited and/or credited (as Transfers) to Inventory New Vehicles – Other New Car and Truck, Account 125. These transactions should be recorded in the New Vehicle Purchase Journal.




OTHER NEW CARS – RETAIL – CDJR: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:



CREDIT Sales with:


These accounts should be used in conjunction with Other New Cars – Retail – Chrysler/Fiat, Sales Account 425-A.

Procedure:



FCA


OTHER NEW CARS – RETAIL – CDJR: SPECIAL VEHICLE INCOME



CAUTION: This account should be used in conjunction with Other New Cars – Retail – CDJR, Cost of Sales Account 425-C.

Procedure:








OTHER NEW CARS – RETAIL – COMPETITIVE


1. The inventory value of all other competitive new cars sold.

CREDIT Sales with:

1. The gross sales price of all other competitive make new cars sold to:


CAUTION: Use this account for all new competitive car sales for which a specific account has not been provided in the Chart of Accounts.


Procedure:


Discounts and over allowances on new car sales in these accounts should be debited to Discounts and Over allowances – Other New Cars – Retail – Competitive, Account 426-B.

Cars transferred or exchanged between dealers should be debited and/or credited (as Transfers) to Inventory New Vehicles – Other New Car and Truck, Account 125. These transactions should be recorded in the New Vehicle Purchase Journal.



FCA


OTHER NEW CARS – RETAIL – COMPETITIVE: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:



CREDIT Sales with:


These accounts should be used in conjunction with Other New Cars – Retail – Competitive, Sales Account 426-A.

Procedure:




OTHER NEW CARS – RETAIL – COMPETITIVE: SPECIAL VEHICLE INCOME



CAUTION: This account should be used in conjunction with Other New Cars – Retail – Competitive, Cost of Sales Account 426-C.

Procedure:




The offsetting debit for the receivable should be made to Other Receivables, Account 114, or Special Vehicle Income Account 116-C.


FCA

NEW VEHICLE DEPARTMENT Sales: Acct. 427-A thru 462-A

Cost of Sales: Acct. 427-C thru 462-C

NEW TRUCKS – RETAIL


1. The inventory value of all new trucks sold.

CREDIT Sales with:

1. The gross sale price of new trucks sold at retail.

2. The sales price of all retail leased trucks assigned and sold to a finance institution.

CAUTION: Detailing of all accessories and options on the New Vehicle Inventory Record, Form DUAS-305, will facilitate correct billing and costing. All sales and cost data should be recorded on the Vehicle Inventory Record at the time of sale.

Procedure:

Separate Sales and Cost of Sales Accounts are provided for each truck line handled by the dealership, as indicated below:

Sales Cost of Sales New Truck – Retail: Sales Cost of Sales New Truck – Retail: 427-A 427-C Grand Caravan 437-A 437-C Ram 1500 428-A 428-C Pacifica 438-A 438-C Grand Cherokee 429-A 429-C Ram HD (2500/3500) 442-A 442-C Renegade 430-A 430-C Cherokee 444-A 444-C Patriot 431-A 431-C Wrangler 4-DR 448-A 448-C Ram Chassis Cab 3500 432-A 432-C Wrangler 451-A 451-C Journey 433-A 433-C Compass 452-A 452-C Ram Chassis Cab 4500 435-A 435-C Durango 453-A 453-C Ram Chassis Cab 5500 436-A 436-C Ram Promaster City 461-A 461-C Fiat 500L 462-A 462-C Ram ProMaster

Charges made on the vehicle invoice for separate items, such as "title search fees," etc., should be included in the gross sales price of the vehicle and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expenses or as other income unless required by law. Discounts and over allowances on new truck sales should be debited to Discounts and Over Allowances, Account 427-B thru 462-B. Trucks transferred or exchanged between dealersare not to be considered as sales. They should be debited and/orcredited to Transfer Income,Account 460. These transactions should be recorded in the New VehiclePurchaseJournal. Demonstrators should be handled in compliance with respective state laws. They should not be recorded as new truck sales until sold to the ultimate consumer.




NEW TRUCKS – RETAIL: DISCOUNTS AND OVER ALLOWANCES


1. The amount of discount allowed on the retail sale of a truck without a "Trade-in."


CREDIT Sales with:


Procedure:

Separate Discounts and Over Allowances are provided for each individual truck line, as indicated below:

ACCOUNT TRUCK LINES ACCOUNT TRUCK LINES 427-B Grand Caravan 437-B Ram 1500 428-B Pacifica 438-B Grand Cherokee 429-B Ram HD (2500/3500) 442-B Renegade 430-B Cherokee 444-B Patriot 431-B Wrangler 4-DR 448-B Ram Chassis Cab 3500 432-B Wrangler 451-B Journey 433-B Compass 452-B Ram Chassis Cab 4500 435-B Durango 453-B Ram Chassis Cab 5500 436-B Ram Promaster City 461-B Fiat 500L 462-B Ram ProMaster

Discounts and Over Allowances should be charged against the appropriate Truck sales account in the general ledger and treated as a reduction in Sales when the financial statement is prepared.



FCA


NEW TRUCKS – RETAIL: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with: CREDIT Sales with:

1. The amount earned in accordance

with Sales/Purchase Incentive Programs applicable to new trucks.

CAUTION: Divisional Sales/Purchase Incentive Bonus Programs should be studied thoroughly to assure proper understanding of the various programs and their provisions. This will facilitate proper accounting of each incentive or bonus program.

The offsetting entries are debited to Factory Receivables–Special Vehicle Income, Account 116-C, or Other Receivables, Account 114. Refer to the description of that account for the uniform method of recording Special Vehicle Income.

Procedure:

Separate accounts are provided for each truck line, as indicated below:

SPECIAL SPECIAL VEH. INC. VEH. INC. ACCOUNT TRUCK LINES ACCOUNT TRUCK LINES

427-D Grand Caravan 437-D Ram 1500 428-D Pacifica 438-D Grand Cherokee 429-D Ram HD (2500/3500) 442-D Renegade 430-D Cherokee 444-D Patriot 431-D Wrangler 4-DR 448-D Ram Chassis Cab 3500 432-D Wrangler 451-D Journey 433-D Compass 452-D Ram Chassis Cab 4500 435-D Durango 453-D Ram Chassis Cab 5500 436-D Ram Promaster City 461-D Fiat 500L 462-D Ram ProMaster

Units properly recorded in the New Vehicle Sales Journal, reflecting the Special Vehicle Income earned under each incentive/bonus program, may preclude the necessity of maintaining an additional receivable schedule or register of Special Vehicle Income. It is recommended that each New Vehicle Sales Journal sheet be properly identified, indicating each bonus level of the incentive program.

Numbering the sales in the New Vehicle Sales Journal, beginning with the first eligible unit, will permit an accurate computation of the Special Vehicle Income as each retroactive bonus level is reached.



Acct. 410-A

NEW VEHICLE DEPARTMENT Sales:


OTHER NEW TRUCKS – RETAIL – MASERATI


1. The inventory value of all other discontinued Maserati new trucks sold.

CREDIT Sales with:

1. The gross sales price of all other discontinued Maserati new trucks sold to:


CAUTION: Use this account for all M a s e r a t i New Truck Sales, for which a specific account has not been provided in the Chart of Accounts.


Procedure:


Discounts and over allowances on new truck sales in these accounts should be debited to Discounts and Over Allowances–Other New Trucks–Retail–Maserati, Account 410-B.

Trucks transferred or exchanged between dealers should be debited and/or credited (as Transfers) to Inventory Trucks – CDJR/AR/F, Account 123. These transactions should be recorded in the New Vehicle Purchase Journal.

Demonstrators should be handled in compliance with respective state laws. They should not be recorded as new truck sales until sold to the ultimate consumer.



FCA

NEW VEHICLE DEPARTMENT

Sales: Acct. 410-B

OTHER NEW TRUCKS – RETAIL – MASERATI: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:



CREDIT Sales with:

CAUTION: This account should be used in conjunction with Other New Trucks - Retail – Maserati, Sales Account 410-A.

Procedure:

Discounts and over allowances on new truck sales that are charged to this account should be debited against the gross sales amount in the general ledger and for financial statement purposes



OTHER NEW TRUCKS – RETAIL – MASERATI: SPECIAL VEHICLE INCOME


1. All special income earned from the manufacturer and/ or distributor in the form of sales and/or purchase program bonuses and allowances.

CAUTION: This account should be used in conjunction with Other New Trucks - Retail – Maserati, Sales Account 410-C.

Procedure:






FCA



OTHER NEW TRUCKS – RETAIL – FIAT/ALFA ROMEO CORPORATION


1. The inventory value of all other discontinued Fiat/Alfa Romeo new trucks sold.

CREDIT Sales with:

2. The gross sales price of all other discontinued Fiat/Alfa Romeo new trucks sold to:


CAUTION: Use this account for all F i a t/Alfa Romeo New Truck Sales, for which a specific account has not been provided in the Chart of Accounts.


Procedure:


Discounts and over allowances on new truck sales in these accounts should be debited to Discounts and Over Allowances–Other New Trucks–Retail–Fiat/Alfa Romeo, Account 418-B.

Trucks transferred or exchanged between dealers should be debited and/or credited (as Transfers) to Inventory Trucks – CDJR/AR/F, Account 123. These transactions should be recorded in the New Vehicle Purchase Journal.



5-22


FCA

(2/18)

Acct. 418-A


Sales: Acct. 418-B

OTHER NEW TRUCKS – RETAIL – FIAT/ALFA ROMEO: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:



CREDIT Sales with:

CAUTION: This account should be used in conjunction with Other New Trucks - Retail – Fiat/Alfa Romeo, Sales Account 418-A.

Procedure:


(2/18)


FCA 5-23


OTHER NEW TRUCKS – RETAIL – FIAT/ALFA ROMEO: SPECIAL VEHICLE INCOME



CAUTION: This account should be used in conjunction with Other New Trucks - Retail – Fiat/Alfa Romeo, Sales Account 418-C.

Procedure:








OTHER NEW TRUCKS – RETAIL – CDJR CORPORATION


1. The inventory value of all other discontinued CDJR new trucks sold.

CREDIT Sales with:

3. The gross sales price of all other discontinued CDJR new trucks sold to:


CAUTION: Use this account for all CDJR New Truck Sales, for which a specific account has not been provided in the Chart of Accounts.


Procedure:


Discounts and over allowances on new truck sales in these accounts should be debited to Discounts and Over Allowances–Other New Trucks–RetaiI–CDJR, Account 439-B.

Trucks transferred or exchanged between dealers should be debited and/or credited (as Transfers) to Inventory T r u c k s CDJR/AR/F, Account 123. These transactions should be recorded in the New Vehicle Purchase Journal.


(2/18)


FCA 5-25


Sales: Acct. 439-B

OTHER NEW TRUCKS – RETAIL – CDJR: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:



CREDIT Sales with:

CAUTION: This account should be used in conjunction with Other New Trucks - Retail - CDJR, Sales Account 439-A.

Procedure:



FCA

(2/18)


OTHER NEW TRUCKS – RETAIL – CDJR: SPECIAL VEHICLE INCOME



CAUTION: This account should be used in conjunction with Other New Trucks - Retail - CDJR, Sales Account 439-C.

Procedure:





(2/18)


FCA 5-27



RECREATIONAL VEHICLES – RETAIL


1. The inventory value of all new motorized recreational vehicles sold.

CREDIT Sales with:

1. The gross sales price of new motorized recreational vehicles sold at retail.

CAUTION: Detailing of all options and accessories on the Vehicle Inventory Record, Form DUAS-305, will facilitate correct billing and costing. All sales and cost data should be recorded on the Vehicle Inventory Record at the time of sale.

Procedure:


Discounts and over allowances on new motorized recreational vehicle sales should be debited to Discounts and Over Allowances – Recreational Vehicles, Account 440-B.

Motorized recreational vehicles transferred or exchanged between dealers are not considered as sales. They should be debited and/or credited as Transfers to Inventory, Account 124. These transactions should be recorded in the New Vehicle Purchase Journal.

Demonstrators should be handled in compliance with respective state laws. They should not be recorded as new sales until sold to the ultimate consumer.


FCA

(2/18)


RECREATIONAL VEHICLES – RETAIL: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:

1. The amount of discount allowed on the retail sale of a motorized recreational vehicle without a "Trade-In."

2. The amount allowed over the current wholesale value (less estimated reconditioning costs) of a used vehicle accepted in trade.

CREDIT Sales with:


Procedure:

Discounts and over allowances on new motorized recreational vehicles should be debited to this account. They should be charged against the gross sales account in the general ledger and treated as a reduction in sales when the financial statement is prepared.

(2/18)


FCA 5-29


RECREATIONAL VEHICLES – RETAIL: SPECIAL VEHICLE INCOME

DEBIT Cost of Sales with: CREDIT Cost of Sales with:

1. The amount earned in accordance with Sales/Purchase Incentive Programs applicable.

CAUTION: Sales/Purchase Incentive Bonus Programs should be studied thoroughly to assure proper understanding of the various programs and their provisions as initiated by the Recreational Vehicle manufacturer. This will facilitate proper accounting of each incentive or bonus program.

Procedure:

Units properly recorded in the New Vehicle Sales Journal, reflecting the Special Vehicle Income earned under each incentive/bonus program, may preclude the necessity of maintaining an additional receivable schedule or register of Special Vehicle Income. It is recommended that each New Vehicle Sales Journal sheet be properly identified, indicating each bonus level of the incentive program.

Numbering the sales in the New Vehicle Sales Journal, beginning with the first eligible unit, will permit an accurate computation of the Special Vehicle Income as each retroactive bonus level is reached.

The offsetting entries are debited to Other Receivables – Account 114, or Special Vehicle Income Account 116-C.


FCA

(2/18)



OTHER NEW TRUCKS – RETAIL – COMPETITIVE


1. The inventory value of all other competitive new trucks sold.

CREDIT Sales with:

1. The gross sales price of all other competitive new trucks sold to:


CAUTION: Use this account for all new truck sales for which a specific account has not been provided in the Chart of Accounts.


Procedure:


Discounts and over allowances on new truck sales in these accounts should be debited to Discounts and Over Allowances – Other New Trucks, Account 441-B.

Trucks transferred or exchanged between dealers should be debited and/or credited (as Transfers) to Inventory Other New Car and Truck, Account 125. These transactions should be recorded in the New Vehicle Purchase Journal.


(2/18)


FCA 5-31


OTHER NEW TRUCKS – RETAIL – COMPETITIVE: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:


2. The amount allowed over the current whole sale value (less estimated reconditioning costs) of a used vehicle accepted in trade.

CREDIT Sales with:

CAUTION: This account should be used in conjunction with Other Competitive New Trucks–Retail, Sales Account 441-A.

This account has been provided for those dealerships desiring its use for management purposes, or where required by law.

Procedure:

Discounts and over allowances on new truck sales that are charged to this account should be debited against the gross sales amount in the general ledger and for financial statement purposes.


FCA

(2/18)


OTHER NEW TRUCKS – RETAIL – COMPETITIVE: SPECIAL VEHICLE INCOME


1. All special income earned from the manufacturer and/or distributor in the form of sales and/or purchase program bonuses and allowances.

CAUTION: This account should be used in conjunction with Other Competitive New Trucks – Retail, Cost of Sales Account 441-C.

Procedure:

Sales and/or Purchase Incentive Bonus Programs should be studied thoroughly to assure proper understanding of the various programs and their provisions. This will facilitate proper accounting of incentive or bonus programs.




(2/18)


FCA 5-33



NEW CARS – FLEET


1. The inventory value of fleet cars sold. 2. CREDIT – any allowance amounts earned

under value of fleet programs applicable at the time of the fleet sale.

CREDIT Sales with:

1. The sales price of all Chrysler car lines only, sold to fleet customers (as defined below).

CAUTION: Discounts and over allowances on fleet car sales should be netted against the gross sale amount, inasmuch as a separate account has not been provided for these items. Likewise, any incentive program earnings should be credited directly to cost of sales inasmuch as a separate special vehicle income account has not been provided.

Procedure:

For accounting clarification, the following classifications and/or conditions will serve as a guide in determining fleet car sales:

A. All units sold to state and local governmental agencies, such as:

1. State Offices 2. City, County, Township, etc. Vehicles sold to these agencies are usually done so under "Special Bids."

B. All units sold to public utilities–municipally or privately owned. C. All taxicabs and/or police cars. D. Driver Education cars actually sold to educational institutions (including professional/private schools)

on an unrestricted basis (title passing to such institution). E. All units sold to lease and rental companies where title passes to the lease and rental

company, including FCA Leasing Licensees. F. All units sold to commercial fleet accounts. To qualify under this classification, it is necessary that the

account be one that is serviced by FCA Fleet Operations or shown in the current R. L. Polk listing of national fleet accounts.

All sales and cost data should be recorded on the Vehicle Inventory Record, Form DUAS-305, at the time of sale.


FCA

(2/18)

NEW VEHICLE DEPARTMENT Sales: Cost of Sales:

NEW TRUCKS FLEET

Acct. 446-A Acct. 446-C


1. The inventory value of fleet trucks sold. 2. CREDIT – any allowance amounts earned

under value or fleet programs applicable at the time of the fleet sale.

CREDIT Sales with:

1. The sales price of all Chrysler Trucks only sold to fleet customers (as defined below).

CAUTION: Discounts and over allowances on fleet truck sales should be charged against the gross sale amount, inasmuch as a separate account has not been provided for these items. Likewise, any incentive program earnings should be credited directly to cost of sales inasmuch as a separate special vehicle income account has not been provided.

Procedure:

For accounting clarification, the following classifications and/or conditions will serve as a guide in determining fleet truck sales:

A. All units sold to state and local government agencies, such as:

1. State Offices 2. City, County, Township, etc.

Vehicles sold to these agencies are usually done so under "Special Bids." B. All units sold to public utilities–municipally or privately owned. C. All "fire-engine" trucks and police trucks. D. All units sold to lease and rental companies – actually sold and for which title passes to such lease

and rental company, including FCA Leasing Licensees. E. All units sold to commercial fleet accounts. To qualify under this classification, it is necessary that the

account be one that is serviced by FCA Fleet Operations or shown in the current R. L. Polk listing of national fleet accounts.


(2/18)


FCA 5-35



NON-AUTOMOTIVE AND OTHER – NEW


1. The inventory value of new Non-Automotive

and Other Automotive (apart from a vehicle) units sold.

2. The amount paid in excess of current wholesale value (less estimated reconditioning costs) for repossessed Non-Automotive units originally sold as new.

3. CREDIT – any amounts recovered on repossession losses, originally charged to this account.

CREDIT Sales with:

1. The retail and wholesale sales price of new Non-Automotive and Other Automotive (apart from a vehicle) units sold.

CAUTION: Use of these accounts is restricted to new units described in Other Automotive Inventories, Account 134, when sold separately from vehicles; and Non-Automotive Inventories, Account 137.

Retail and Wholesale sales should be separated and clearly documented for sales tax purposes.

Procedure: Charges made on the vehicle invoice for separate items, such as "title search fees," etc., should be included in the gross sales price of the unit and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expense or as other income unless required by law. All sales and cost data should be recorded on a subsidiary inventory record. It is recommended that Vehicle Inventory Record, Form DUAS-305, be used for this purpose. Typical examples of Other Automotive units included in this account are:

A. Snowplows (when sold as an individual new unit, not installed on a vehicle) B. Fifth Wheels (when sold as an individual new unit, not installed on a vehicle) C. All other new items included in Account 134 when sold as individual units not installed on a vehicle

Typical examples of Non-Automotive units included in this account are: A. New Tractors B. New Boats C. New Motorcycles D. All other new items included in Account 137

All discounts and over allowances should be charged to Discounts and Over Allowances, Account 450-B. Repossession losses for Non-Automotive units should be charged to this Cost of Sales Account. Any amounts recovered by collection, through the dealership's recourse action against the customer for the loss sustained due to repossession of the unit, should be credited to this Cost of Sales Account. Such losses on Other Automotive units (sold apart from vehicles) should be charged to Repossessed Vehicle Losses – New, Account 455-E in the same manner as regular automotive losses. Units transferred or exchanged between dealers should be debited and/or credited to the applicable inventory accounts (as a Transfer). These transactions should be recorded in the New Vehicle Purchase Journal.


FCA

(2/18)


NON-AUTOMOTIVE AND OTHER – NEW: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:

1. The amount of discount allowed on the retail sale of a unit without a "Trade-in."

2. The amount allowed over the current wholesale value (less estimated reconditioning costs) of a used vehicle/unit accepted in trade.

CREDIT Sales with:

CAUTION: This account should be used in conjunction with Non-Automotive and Other – New, Sales Account 450- A.

Refer to that account description for uniform handling of "Other Automotive" units sold separate from vehicles.


Procedure:

Discounts and over allowances on new unit sales that are charged to this account should be netted against the gross sales in the general ledger and for financial statement purposes.

(2/18)


FCA 5-37

NEW VEHICLE DEPARTMENT Cost of Sales:

VOLUME INCENTIVES – NEW Acct. 454


1. The amount of volume incentive monies earned under volume incentive programs established by FCA. Example might be incentive monies earned for reaching a sales objective/quota including stair step programs and other volume based target and goals.

CAUTION:

• Volume incentive monies should be recorded / accrued as they are earned and not when the monies are actually received.

• PROPERACCOUNTINGPROCEDURECALLFORDEALERS:

o Dealers to allocate this income back into each vehicle lines under accounts 402 to 462 appropriately.

o Account 454 was created to facilitate those few dealers whose accounting systems are unable to track and allocate incentive payments back into vehicle line

o Volume incentive money should not be reported in Miscellaneous Income A/c 609

Procedure:

Amounts reimbursed by FCA for reaching volume incentive sales goals/objectives including various stair step programs.

Other rebate programs targeted specifically toward year, make, model criteria that are not tied to volume based objectives should be recorded through appropriate Special Vehicle income accounts.


Debit Credit Receivable – Cash/Consumer Rebates – 116H Volume Incentives – New – 454

DEALER UNIFORM ACCOUNTING SYSTEM FCA

5-38

(2/18)

NEW VEHICLE DEPARTMENT Cost of Sales: Acct. 455-E

REPOSSESSED VEHICLE LOSSES – NEW


1. The amount paid in excess of current wholesale value (less estimated reconditioning costs) for repossessed vehicles and other automotive units originally sold as new units.



CREDIT Cost of Sales with:



CAUTION: Repossessed units should be recorded in the appropriate used inventory account. When sold, they should be recorded in the appropriate sales and cost accounts as a used car, used truck, or other automotive sale.

This account should not be used for Non-Automotive merchandise repossession losses. These losses should be charged to Cost of Sales Account 450-C.

For additional information, refer to Reserve for Repossession Losses, Account 250.

Procedure:

Repossessed units should be placed in inventory at their current estimated wholesale value (less estimated reconditioning costs).

The amount paid above the current wholesale value should be charged directly to the appropriate new or used “Repossessed Vehicles Losses” account. Subsequent “Write-Downs” should then be charged to the appropriate used car or used truck inventory write-down account.

Any amounts recovered by recourse against the customer, for the loss sustained due to repossession of the unit, should be credited to this account.

(2/18)


FCA 5-39

NEW VEHICLE DEPARTMENT Cost of Sales: Acct. 457-F

FINANCE CONTRACT RESERVES


1. The amount of finance contract reserve income earned on financing automotive units sold by the dealership.

2. The amount of any service fees earned for recording, filing, etc., liens for financial institutions.

CAUTION: Only finance income earned on new car, new truck, or new other automotive units should be recorded in this account.


Procedure:

The financing and insurance institution normally will furnish the dealer, by means of a memo advice or statement, the amount of finance and insurance commissions on each contract being credited to this account. Any variances should be promptly investigated and proper disposition made.

The Finance Reserve, Insurance Commission, Maintenance Only Contracts, Protection Products & Accessories, Administrative Fees, and Other F&I Income should be calculated on each individual transaction and recorded in the New Vehicle Sales Journal simultaneously with the corresponding sale.

Income from Vehicle Financing to be recorded under the account 457F Income from selling Insurance products to be recorded under the account 463 Income from selling Service Contracts/Extended Warranties to be recorded under the account 458 Income from Maintenance Contract sales on New Vehicles to be recorded under the account 464 Income from products such as Protection products to be recorded under the account 465 Administrative Fee Income related to Service Contract Sales to be recorded under the account 466 Other new F&I income to be recorded under the account 467


FCA

(2/18)



SERVICE CONTRACTS – NEW


1. The amount paid by the dealership for: A. FCA Service Contracts B. Extended Protection Plans

CREDIT Sales with:

1. The selling price of: A. FCA Service Contracts B. Extended Protection Plans


2. Receipt of objective based program monies:

A. Bonus Bank Program. B. Xtreme Profit Sharing.

CAUTION: Service Contract/Extended Warranty Income earned on New Vehicle sales to be recorded in this account.

Make sure that Incentive/Holdback monies are not recorded multiple times as there are several categories of Service Contracts in the F & I section.

Procedure:

Account 207, Vehicle Protection/Extended Warranty, should be used to set up the amount of payable to the protection plan companies.


Service Contracts/Extended warranty plans providing coverage on major mechanical components should be recorded in this account. Income from Vehicle Financing to be recorded under the account 457F Income from selling Insurance products to be recorded under the account 463 Income from selling Service Contracts/Extended Warranties to be recorded under the account 458 Income from Maintenance Contract sales on New Vehicles to be recorded under the account 464 Income from products such as Protection products to be recorded under the account 465 Administrative Fee Income related to Service Contract Sales to be recorded under the account 466 Other new F&I income to be recorded under the account 467

(2/18)


FCA 5-41A

NEW VEHICLE DEPARTMENT Account 460

Transfer of new Car/Truck to another dealer for cash at a gain:

DEBIT with:

A. Cash

CREDIT with:

B. Inventories C. Transfer Income

Transfer of new Car/Truck to another dealer for cash at a loss:

DEBIT with:

D. Cash E. Transfer Income

CREDIT with:

F. Inventories

CAUTION:

Procedure/Background:

The dealer often has working relationships with dealers involving like brands in the surrounding area and can offer to trade cars with them. It usually works out well for both if the other dealer has had a run on black cars, or manual transmissions, or whatever, except for the transit fees. Many combinations of colors and options make it difficult for Dealer to stock everything. Dealer Trade allows the salesperson to gain the business of a customer who walks onto the lot. The salesperson wants to do everything in their power to prevent the customer from taking their business elsewhere.

Note: This account deals with only Exchange or Sale of New Vehicle(s) Between Dealerships Representing Same Manufacturer. This account is only to be used for the amount of gain or loss on a dealer trade. Trades that result in no loss or gain do not need to be recorded in this account.


FCA

(2/18)

NEW VEHICLE DEPARTMENT Cost of Sales: Acct. 463-C

INSURANCE CONTRACTS – NEW


1. The amount paid by the dealership for Insurance Contracts.


1. The selling price of Insurance Contracts.

CAUTION: Insurance Contract Income earned on New Vehicle sales to be recorded in this account.


Procedure:

Account 207, Vehicle Protection/Extended Warranty, should be used to setup the amount of Payable to the protection plan companies.



(2/18)


FCA 5-41C



MAINTENANCE ONLY CONTRACTS - NEW


1. The amount paid by the dealership for Maintenance Contracts.

CREDIT Sales with:

1. The selling price of Maintenance Only Service Contracts



A. Bonus Bank Program B. Xtreme Profit Sharing

CAUTION: Income associate with New Vehicles only

Income from selling maintenance contracts that offer services similar to Lube Oil/Filter, Scheduled Maintenance, Rotate Tires etc.

Make sure that Incentive/Hold Back monies are not recorded multiple times as there are several categories of Service Contracts in the F&I section.

Procedure:



Service Contracts/Extended warranty plans providing coverage on major mechanical components should not be recorded in this account. Income from Vehicle Financing to be recorded under the account 457F Income from selling Insurance products to be recorded under the account 463 Income from selling Service Contracts/Extended Warranties to be recorded under the account 458 Income from Maintenance Contract sales on New Vehicles to be recorded under the account 464 Income from products such as Protection products to be recorded under the account 465 Administrative Fee Income related to Service Contract Sales to be recorded under the account 466 Other new F&I income to be recorded under the account 467


FCA

(2/18)



PROTECTION PRODUCTS & ACCESSORIES - NEW


1. The amount paid by the dealership for F & I Protection Products & Accessories.

CREDIT Sales with:

1. The selling price of protection products and accessories (Master Shield products, bug deflectors, running boards, etc.).




CAUTION: Relates to products sold on New Vehicles only.

Make sure that Incentive/Hold Back monies are not recorded multiple times as there are several categories of Service Contracts in the F&I section.

Procedure:




(2/18) DEALER UNIFORM ACCOUNTING SYSTEM 5-41E

FCA


Sales: Acct. 467-A Cost of Sales: Acct. 467-C

OTHER F & I - NEW


1.

CREDIT Sales with:

1. The amount of “Other F&I” income earned on New Automotive units sold by the Dealership.

CAUTION:

Procedure:

Items that go into this account: Examples may be (but not limited to) "Appearance Guard", Wheel and Rim , GAP Insurance, Lo-Jacks, Nitrogen- Tire Guard and/or etching, Wheel Locks etc. Note these items must actually be sold and NOT assumed, preprinted or included on every deal.



5-41F DEALER UNIFORM ACCOUNTING SYSTEM

FCA

(2/18)



F & I CHARGEBACKS - NEW DEBIT Cost of Sales with:

1. Charge backs received from any F&I product vendors.

CREDIT Sales with: 1.

CAUTION:

Procedure: Cancellation of finance income due to prepayment of contract by customer Income/Loss from the cancellation of Insurance contract by Customer Income/Loss from the cancellation of Service Contracts - Major Plans, Mechanical Plans, Maintenance plans, Protection Plans Early Termination of other F&I products New Income from Vehicle Financing to be recorded under the account 457F Income from selling Insurance products to be recorded under the account 463 Income from selling Service Contracts/Extended Warranties to be recorded under the account 458 Income from Maintenance Contract sales on New Vehicles to be recorded under the account 464 Income from products such as Protection products to be recorded under the account 465 Administrative Fee Income related to Service Contract Sales to be recorded under the account 466 Other new F&I income to be recorded under the account 467

(2/18)

DEALER UNIFORM ACCOUNTING

SYSTEM FCA

5-41G


Acct. 469-A

FLEET VOLUME INCENTIVES - Canada Only Acct. 469-C


1. The amount of volume incentive monies earned under volume incentive programs established by FCA. Example might be incentive monies earned for reaching a sales objective/quota including stair step programs and other volume based target and goals.

Procedure:

Note this is for Canadian Dealerships only. Fleet Incentive Bonus Programs should be studied thoroughly to assure proper understanding of the various programs and their provisions. This will facilitate proper accounting of incentive or bonus programs.

Units properly recorded in the New Vehicle Sales Journal, reflecting Fleet Volume Incentives earned under each incentive/bonus program, will preclude the necessity of maintaining an additional receivable schedule or register of Fleet incentives.


The offsetting debit for the receivable should be made to Other Receivables, Account 114.


5-41H FCA (2/18)

USED VEHICLE DEPARTMENT Sales: Acct. 470-A


USED CARS – RETAIL


1. The current inventory value (excluding reconditioning costs) of used cars retailed.

CREDIT Sales with:

1. The gross sales price of used cars sold at retail.

CAUTION: When used cars are sold at retail, reconditioning costs should be recorded separately to Reconditioning – Used Cars – Retail, Account 470-D, in the used vehicle sales journal, the general ledger, and on the financial statement.

Procedure:

Charges made on the vehicle invoice for separate items, such as "title search fees," etc., should be included in the gross sales price of the vehicle and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expense or as other income unless required by law.

Discounts and over allowances on used car sales should be debited to Discounts and Over Allowances, Account 470-B.


(2/18)


FCA

5-42

USED VEHICLE DEPARTMENT Sales: Acct. 470-B

USED CARS RETAIL: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:

1. The amount allowed over the current wholesale value (less estimated reconditioning costs) of a vehicle, or other asset, accepted in trade on a used car sale.

CREDIT Sales with:

CAUTION: This account has been provided for those dealerships desiring its use for management purposes, or where use is required by law.

Procedure:

Over allowances on trade-in merchandise accepted on used car sales should be debited to this account.

This account should be netted against the gross sales amount in the general ledger and for financial statement purposes.

5-43

DEALER UNIFORM ACCOUNTING

SYSTEM FCA (2/18)

USED VEHICLE DEPARTMENT Cost of Sales: Acct. 470-D

RECONDITIONING – USED CARS – RETAIL


1. The reconditioning costs for retail sales of Used Cars.


CAUTION: The balance in this account represents the total reconditioning costs on units sold at retail.

Reconditioning costs should remain in inventory as part of the unit cost until such time as the unit is sold.

Procedure:

Reconditioning costs should be carefully estimated when the unit is accepted. Proper preparation of the Used Vehicle Appraisal, Form DUAS-453, at the time the unit is appraised, will aid in determining what reconditioning is required and its relative cost.

Actual reconditioning costs of each used unit should be compared with the estimated reconditioning cost made at the time of the original appraisal. Large variances should be reviewed by the dealer with the used car manager, the appraiser, and the service manager or used car reconditioning manager.

For Financial Statement reporting purposes, the balance in this account should be combined with Account 471-D, Reconditioning – Used Trucks – Retail for the "MEMO ONLY" Reconditioning Cost. This is in addition to the normal sales and gross profit reporting.

(2/18)


FCA

5-44



USED TRUCKS – RETAIL


1. The inventory value (less reconditioning costs) of used trucks and motorized recreational vehicles.

CREDIT Sales with:

1. The gross sales price of used trucks and motorized recreational vehicles sold at retail.

CAUTION: When used trucks are sold at retail, reconditioning costs should be recorded separately to Reconditioning – Used Trucks – Retail, Account 471-D in the sales journal, the general ledger, and for financial statement purposes.

Procedure:

Charges made on the vehicle invoice for separate items, such as "title search fees," etc., should be included in the gross sales price of the vehicle and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expense or as other income unless required by law.

Discounts and over allowances on used truck sales should be debited to Used Trucks – Discounts and Over Allowances, Account 471-B.


5-45


FCA

(2/18)


USED TRUCKS – RETAIL: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:

1. The amount allowed over the current wholesale value (less estimated reconditioning costs) of a unit accepted in trade on a used truck or motorized recreational vehicle sale.

CREDIT Sales with:

CAUTION: This account has been provided for those dealerships desiring its use for management purposes, or where use is required by law.

Procedure:

Over allowances on units accepted in trade on used truck and motorized recreational vehicle sales should be debited to this account. They should be netted against the gross sale amount in the general ledger, and for financial statement purposes.

(2/18)


FCA

5-46

USED VEHICLE DEPARTMENT Cost of Sales: Acct. 471-D

RECONDITIONING – USED TRUCKS – RETAIL


1. The reconditioning costs for retail sales of: A. Used Trucks B. Used Motorized Recreational Vehicles


CAUTION: The balance in this account represents the total reconditioning costs on units sold at retail.

Reconditioning costs should remain in inventory as part of the unit cost until such time as the unit is sold.

Procedure:

Reconditioning costs should be carefully estimated when the unit is accepted. Proper preparation of the Used Vehicle Appraisal, Form DUAS-453, at the time the unit is appraised, will aid in determining what reconditioning is required and its relative cost.

Actual reconditioning costs of each used unit should be compared with the estimated reconditioning costs made at the time of the original appraisal. Large variances should be reviewed by the dealer with the used truck manager, the appraiser, and the service manager or the used truck reconditioning manager.

For Financial Statement reporting purposes, the balance in this account should be combined with Account 470-D, Reconditioning – Used Cars – Retail for the "MEMO ONLY" Reconditioning Cost. This is in addition to the normal sales and gross profit reporting.

5-47


FCA (2/18)



USED CARS – WHOLESALE


1. The inventory value of all used cars wholesaled and/or scrapped, including all:

A. Reconditioning costs. B. Auction fees. C. Cost of transporting used cars to

auctions.


1. The sales price of used cars wholesaled.

2. The selling price of all parts removed from scrapped used passenger cars.

CAUTION: Units used as a source of supply for used parts should be classified as "scrap" and charged to cost of sales (refer to Inventory-Used Cars, Account 128, for additional information).

Procedure:

When used cars are sold at wholesale, reconditioning costs should be charged to this cost of sales account in the sales journal, the general ledger, and for financial statement purposes.

Cars dismantled or scrapped on the premises should not be shown as units sold on the financial statement.

All sales and cost data should be recorded on the Vehicle Inventory Record, Form DUAS-305, at the time of the sale.

(2/18)


FCA

5-48



USED TRUCKS – WHOLESALE


1. The inventory value of all used trucks

and motorized recreational vehicles wholesaled and/or scrapped, including all:

A. Reconditioning costs. B. Auction fees. C. Costs of transporting used trucks

and motorized recreational vehicles to auctions.


1. The sales price of used trucks and motorized recreational vehicles wholesaled.

2. The selling price of all parts removed from scrapped used trucks and motorized recreational vehicles.

CAUTION: Units used as a source of supply for used parts should be classified as "scrap" and charged to cost of sales (refer to Inventory–Used Cars, Account 127, for additional information).

Procedure:

When used trucks and motorized recreational vehicles are sold at wholesale, reconditioning costs should be charged to this cost of sale account in the sales journal, the general ledger, and for financial statement purposes.

Used trucks and motorized recreational vehicles dismantled or scrapped on the premises should not be shown as units sold in the financial statement.

All sales and cost data should be recorded on the Vehicle Inventory Record, Form DUAS-305, at the time of the sale.

5-49


FCA (2/18)



USED CPOV CARS RETAIL


1. The current inventory value (excluding reconditioning costs) of used CPOV cars retailed.


1. The gross sales price of used CPOV cars sold at retail.

CAUTION: When used CPOV cars are sold at retail, reconditioning costs should be recorded separately to Reconditioning-Used Vehicles-Retail, Account 472-D, in the used vehicle sales journal, the general ledger, and on the financial statement. This account to be used by Five Star Dealers only.

Procedure:

Charges made on the vehicle invoice for separate items, such as "title search fees, etc., should be included in the gross sales price of the vehicle and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expenses or as other income unless required by law.

Discounts and over allowances on new car sales should be debited to Discounts and Over Allowances, Account 472-B.


(2/18)


FCA

5-50


USED CPOV CARS RETAIL: DISCOUNTS AND OVER ALLOWANCES


1. The amount allowed over the current wholesale value (less estimated reconditioning costs) of a vehicle, or other asset, accepted in trade on a used car sale.


CAUTION: This account has been provided for those dealerships desiring its use for management purposes, or where use is required by law. This account to be used by Five Star Dealers Only.

Procedure:



5-51


FCA (2/18)

USED VEHICLE DEPARTMENT Sales: Acct. 475-D

RECONDITIONING – USED CPOV CARS – RETAIL


1. The Reconditioning costs for retail sales of used CPOV Cars.


CAUTION: The balance is this account represents the total reconditioning costs on units sold at retail. Reconditioning cost should remain in inventory as part of the unit cost until such time as the unit is sold. This account to be used by Five Star Dealers only.

Procedure:

For Financial Statement reporting purposes, the balance in this account should be combined with Account 470-D and 471-D, Reconditioning-Used Cars and Used Trucks-Retail for the "MEMO ONLY" Reconditioning Cost. This is in addition to the normal sales and gross profit reporting.

(2/18)


FCA

5-52



USED CPOV TRUCKS RETAIL


1. The current inventory value (excluding

reconditioning costs) of used CPOV Trucks retailed.


1. The gross sales price of used CPOV Trucks sold at retail.

CAUTION: When used CPOV Truck are sold at retail, reconditioning costs should be recorded separately to Reconditioning-Used Vehicles-Retail, Account 472-D, in the used vehicle sales journal, the general ledger, and on the financial statement. This account is to be used by Five Star Dealers only.

Procedure:

Charges made on the vehicle invoice for separate items, such as title search fees, etc., should be included in the gross sales price of the vehicle and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expenses or as other income unless required by law.

Discounts and over allowances on new car sales should be debited to Discounts and Over Allowances, Account 472-B.


5-53


FCA (2/18)


USED CPOV TRUCKS RETAIL: DISCOUNTS AND OVER ALLOWANCES


1. The amount allowed over the current wholesale value (less estimated reconditioning costs) of a vehicle or other asset accepted in trade on a used truck sale.


CAUTION: This account has been provided for those dealerships desiring its use for management purposes or where use is required by law. This account is to be used by Five Star Dealers only.

Procedure:



(2/18)


FCA

5-54

USED VEHICLE DEPARTMENT Sales: Acct. 476-D

RECONDITIONING – USED CPOV TRUCKS – RETAIL


1. The Reconditioning costs for retail sales of used CPOV trucks.


CAUTION: The balance in this account represents the total reconditioning costs on units sold at retail. Reconditioning cost should remain in inventory as part of the unit cost until such time as the unit is sold. This account to be used by Five Star Dealers only.

Procedure:

For Financial Statement reporting purposes, the balance in this account should be combined with Account 470-D and 471-D, Reconditioning-Used Cars and Used Trucks-Retail for the "MEMO ONLY" Reconditioning Cost. This is in addition to the normal sales and gross profit reporting.

5-55


FCA (2/18)

USED VEHICLE DEPARTMENT Cost of Sales: Acct. 476-G

USED CAR INVENTORY – WRITEDOWN


1. The month-end writedown to adjust the inventory value to current estimated wholesale value for:

A. Used Car Inventories B. Other Automotive Inventories (related to

cars).


CAUTION: It is recommended that all used units in inventory be individually reappraised each month-end and written down to their current wholesale values. The use of the Monthly Used Vehicle Analysis, Form DUAS-385, will facilitate reappraising the inventory.

Procedure:

Refer to Inventory – Used Cars, Account 127, for additional information on re-evaluation.

The re-evaluation of used units each month-end with the related inventory writedown will highlight an unbalanced and/or over-valued inventory.

For Financial Statement reporting purposes, the balance in this account should be combined with Account 477-G, Used Truck Inventory – Writedown.

(2/18)


FCA

5-56

USED VEHICLE DEPARTMENT Cost of Sales: Acct. 477-G

USED TRUCK INVENTORY – WRITEDOWN


1. The month-end writedown to adjust the inventory value to current estimated wholesale value for:

A. Used Truck Inventories. B. Used Motorized Recreational Vehicles. C. Other Automotive Inventories (related to

trucks).


CAUTION: It is recommended that all used vehicles in inventory be individually reappraised each month-end and adjusted to their current wholesale values. The use of the Monthly Used Vehicle Analysis, Form DUAS- 385, will facilitate reappraising the inventory.

Procedure:

Refer to Inventory – Used Trucks, Account 128, for additional information on re-evaluation.

The re-evaluation of used trucks and motorized recreational vehicles each month-end with the related inventory writedown will highlight an unbalanced and/or over-valued inventory.

For Financial Statement reporting purposes, the balance in this account should be combined with Account 476-G, Used Car Inventory – Writedown.

5-57


FCA (2/18)

USED VEHICLE DEPARTMENT Account: 478-E

CUSTOMER REPOSSESSION REFUND


1. The surplus due the defaulting customer, as revealed on (line 25 of) the Record of Repossessed Vehicle Sale, Form DUAS 500.


CAUTION: By law a dealership is required to refund any surplus remaining upon disposition of a repossessed vehicle. The determination of amount must be in strict conformity with Section 8 of the FCA Dealer Uniform Accounting System Manual.

Procedure:

At the time a repossessed vehicle is disposed of and a surplus is revealed by the preparation of the Record of Repossessed Vehicle Sale, Form DUAS 500, a General Journal entry should be prepared. The General Journal entry should include all pertinent data, including the defaulting customer's name, the resale customer's name and the identity of the vehicle. The offsetting credit should be to Customer Refunds – Payable, Account 202.

EXAMPLE 478-E Customer Repossession Refund 178.19

202 Customer Refunds–Payable 178.19 To establish the liability for surplus due John Doe resulting from the resale of his repossessed car which was subsequently sold to Joe Smith, 1981 Chrysler LeBaron, VIN 1C3BM46E2BG139760.

Any recovery of a deficiency revealed on line 25 of the Record of Repossessed Vehicle Sale, Form DUAS 500, should be recorded on a cash receipt, debiting Undeposited Cash, Account 102, and crediting Repossessed Vehicle Losses – New, Account 455-E, if the vehicle had previously been sold to the defaulting customer as a new vehicle; or Repossessed Vehicle Losses – Used, Account 480-E, if the vehicle had previously been sold to the defaulting customer as a used vehicle.

(2/18)


FCA

5-58



NON-AUTOMOTIVE AND OTHER – USED


1. The inventory value of used Non-Automotive

and Other Automotive (apart from a vehicle) units sold.

2. Monthly write-downs to adjust the inventory values for Non-Automotive units.

3. The amount paid in excess of wholesale value for repossessed Non-Automotive units.


CREDIT Sales with:

1. The retail and wholesale sales price of used Non-Automotive and Other Automotive (apart from a vehicle) units sold.

CAUTION: Use of these accounts is restricted to used and/or demonstration units described in: Other Automotive Inventories, Account 134, when sold separately from vehicles; and Non-Automotive Inventories, Account 137.

Retail and wholesale sales should be separated and clearly documented for sales tax purposes.

Procedure:

All sales and cost data should be recorded on a subsidiary inventory record. It is recommended that Vehicle Inventory Record, Form DUAS-305, be used for this purpose.

Typical examples of Other Automotive units included in this account are:

A. Snowplows (when sold as an individual used unit not installed on a vehicle). B. Fifth Wheels (when sold as an individual used unit not installed on a vehicle). C. All other used items included in Account 134 when sold as individual units not installed on a vehicle.

Typical examples of Non-Automotive units included in this account are:

A. Used Tractors B. Used Boats C. Used Motorcycles D. All other used items included in Account 137

All discounts and over allowances should be charged to Discounts and Over Allowances, Account 479-B.

Repossession losses for Non-Automotive units only should be charged to this Cost of Sales Account. Any amounts recovered by collection, through the dealership's recourse action against the customer for the loss sustained due to repossession of the unit, should be credited to this Cost of Sales Account. Such losses on Other Automotive units should be charged to Repossessed Vehicle Losses – Used, Account 480-E, in the same manner as regular automotive losses, whether or not installed on a vehicle.

It is recommended that all used Non-Automotive units be individually reappraised each month-end and written down to their current wholesale market value. All writedowns should be charged to this Cost of Sales Account.

In the case of used "Other Automotive" units, any writedowns should be charged to the appropriate vehicle write down account in the same manner as regular used automotive writedowns. The offset to the writedown entries would be to the appropriate inventory account.

5-59


FCA

(2/18)


NON-AUTOMOTIVE AND OTHER – USED: DISCOUNTS AND OVER ALLOWANCES

DEBIT Sales with:

1. The amount allowed over the current wholesale value (less estimated reconditioning costs) of a used unit accepted in trade.

CREDIT Sales with:

CAUTION: This account should be used in conjunction with Non-Automotive and Other – Used Sales Account 479-A. Refer to that account description for uniform handling of "Other Automotive" units sold separate from vehicles.


Procedure:

Over allowances on trade-in merchandise accepted on sales of Used Non-Automotive Merchandise and Other units (apart from vehicles) should be debited to this account. They should be charged against the gross amount of the sale in the general ledger and for financial statement purposes.

(2/18)


FCA

5-60

USED VEHICLE DEPARTMENT Cost of Sales: Acct. 480-E

REPOSSESSED VEHICLE LOSSES USED


1. The amount paid in excess of current wholesale value (less estimated reconditioning costs) for repossessed vehicles and other automotive units originally sold as used units.






CAUTION: Repossessed units should be recorded in the appropriate used inventory account. When sold, they should be recorded in the appropriate sales and cost accounts as a used car, used truck, or used other automotive sale.

This account should not be used for Non-Automotive merchandise repossession losses. These losses should be charged to Cost of Sales Account 479-C.

For additional information, refer to Reserve for Repossession Losses, Account 250.

Procedure:

Repossessed units should be placed in inventory at their current estimated wholesale value (less estimated reconditioning costs).

The amount paid above the current wholesale value should be charged directly to the appropriate new or used "Repossessed Vehicle Losses" account. Subsequent "Write-Downs," if any, should then be charged to the appropriate used car or used truck inventory writedown account.

Any amounts recovered by recourse against the customer, for the loss sustained due to repossession of the unit, should be credited to this account.

5-61


FCA (2/18)

USED VEHICLE DEPARTMENT Cost of Sales: Acct. 481-F

FINANCE CONTRACT RESERVES


1. The amount of finance contract reserve income earned on financing automotive units sold by the dealership.


CAUTION: Only finance income earned on used car, used truck, or used other automotive units should be recorded in this account.


Procedure:

The financing and insurance institution normally will furnish the dealer, by means of a memo advice or statement, the amount of finance and insurance commission on each contract being credited to his account. Any variances should be promptly investigated and proper disposition made.

The Finance Reserve, Insurance Commission, Maintenance Only Contracts, Protection Products & Accessories, Administrative Fees, and Other F&I Income should be calculated on each individual transaction and recorded in the Used Vehicle Sales Journal simultaneously with the corresponding sale.

Income from Vehicle Financing to be recorded under the account 481F Income from selling Insurance products to be recorded under the account 485 Income from selling Service Contracts/Extended Warranties to be recorded under the account 482 Income from Maintenance Contract sales on New Vehicles to be recorded under the account 486 Income from products such as Protection Products to be recorded under the account 487

(2/18)


FCA

5-62



SERVICE CONTRACTS – USED


1. The amount paid by the dealership for:

A. FCA Service Contracts B. Extended Protection Plans

CREDIT Sales with:

1. The selling price of: A. FCA Service Contracts B. Extended Protection Plans



A. Bonus Bank Program. B. Xtreme Profit Sharing.

CAUTION: Service Contract/Extended Warranty Income earned on Used Vehicle sales to be recorded in this account.

Make sure that Incentive/Holdback monies are not recorded multiple times as there are several categories of Service Contracts in the F & I section.

Procedure:



Service Contracts/Extended warranty plans providing coverage on major mechanical components should be recorded in this account. Income from Vehicle Financing to be recorded under the account 481F Income from selling Insurance products to be recorded under the account 485 Income from selling Service Contracts/Extended Warranties to be recorded under the account 482 Income from Maintenance Contract sales on New Vehicles to be recorded under the account 486 Income from products such as Protection products to be recorded under the account 487 Other F&I income to be recorded under the account 489

5-63


FCA (2/18)



CPOV FINANCE CONTRACT RESERVES


1. Any reductions in income previously recorded (caused by customer prepayment of the finance contract).

2. The amount of finance income forfeited due to a repossession.

CREDIT Sales with:

1. The amount of finance income commissions earned on financing used CPOV automotive units sold by the dealership.


CAUTION: Only finance income earned on used car, used truck, or used other automotive units should be recorded in this account.

All other finance income should be credited to Miscellaneous Income, Account 609.

Commissions to dealers may be restricted or prohibited by law in some areas; therefore, legal and tax counsel should be obtained for any special treatment required of this account.

Procedure:

The finance reserve should be calculated on each individual transaction and recorded in the used vehicle sales journal simultaneously with the corresponding sale.

The financing institution normally will furnish the dealer by means of a memo advice or statement, the amount of finance commission on each contract being credited to the account. Any variances should be promptly investigated and proper reclassification made.

(2/18)


FCA

5-64



CPOV USED SERVICE CONTRACTS


1. The amount paid by the dealership for

extended protection plans. 2. Charge backs due to early termination.

CREDIT Sales with:

1. The selling price of extended protection plans.

CAUTION:

Procedure:


5-65DEALER UNIFORM ACCOUNTING SYSTEM

FCA (2/18)

USED VEHICLE DEPARTMENT Cost of Sales: Acct. 485-C

INSURANCE CONTRACTS - USED



CREDIT Sales with:


CAUTION: Insurance Contract Income earned on Used Vehicle sales to be recorded in this account.


Procedure:




(2/18)


FCA

5-66A

USED VEHICLE DEPARTMENT Sales: Cost of Sales:


MAINTENANCE ONLY CONTRACTS - USED


1. The amount paid by the dealership for F & I Maintenance Contracts.

CREDIT Sales with:

1. The selling price of F & I Maintenance Contracts.




CAUTION: Income associated with Used Vehicles only.

Income from selling maintenance contracts that offer service similar to Lube/Oil Filter, Scheduled Maintenance, Rotate Tires, etc. Make sure that Incentive/Hold Back monies are not recorded multiple times as there are several categories of Service Contracts in the F&I section.

Service Contracts/Extended Warranty plans providing coverage on major mechanical components should be recorded in Account 482.

Procedure:




5-66B


FCA (2/18)

USED VEHICLE DEPARTMENT Sales: Cost of Sales:


PROTECTION PRODUCTS & ACCESSORIES - USED


1. The amount paid by the dealership for F & I Protection Products & Accessories.

CREDIT Sales with:

1. The selling price of Protection Products & Accessories (Master Shield products, bug deflectors, running boards, etc.).




CAUTION: Relates to products sold on Used Vehicles only. Make sure that Incentive/Hold Back monies are not recorded multiple times as there are several categories of Service Contracts in the F&I section.

Procedure:




(2/18)


FCA 5-66C



OTHER F & I - USED


1.

CREDIT Sales with:

1. Amounts associated with the sale of other F&I products Used.

CAUTION:

Procedure:

Items that go into this account: Examples may be (but not limited to) "Appearance Guard", Wheel and Rim, GAP Insurance, Lo-Jacks, Nitrogen- Tire Guard and/or etching, Wheel Locks, etc. Note these items must actually be sold and NOT assumed, preprinted or included on every deal.




FCA

(2/18)

USED VEHICLE DEPARTMENT Cost of Sales: Acct. 490-C

F & I CHARGEBACKS - USED


1. Charge backs received from any F & I product vendors.

CREDIT Sales with:

1.

CAUTION: Relates to Used Vehicle sales only

Procedure:

Cancellation of finance income due to prepayment of contract by customer Income/Loss from the cancellation of Insurance contract by Customer Income/Loss from the cancellation of Service Contracts - Major Plans, Mechanical Plans, Maintenance Plans, Protection Plans.

Early termination of other F & I Products - Used.

Income from Vehicle Financing to be recorded under the account 481F Income from selling Insurance Products to be recorded under the account 485 Income from selling Service Contracts/Extended Warranties to be recorded under the account 482 Income from Maintenance Contract sales on New Vehicles to be recorded under the account 486 Income from products such as Protection Products to be recorded under the account 487

(2/18)


FCA

5-66E



CPOV NON-AUTOMOTIVE & OTHER - USED

DEBIT Sales with:

1. The inventory value of used Non-Automotive and Other Automotive (apart from a vehicle) units sold.

2. Monthly write-downs to adjust inventory values for Non-Automotive units.

3. The amount paid in excess of wholesale value for repossessed Non-Automotive units.


CREDIT Sales with: 1. The retail and wholesale sales

price of Non-Automotive and Other Automotive (apart from a vehicle) units sold.

CAUTION: Use of these accounts is restricted to used and/or demonstration units described in: Other Automotive Inventories, Account 134, when sold separately from vehicles; and Non-Automotive Inventories, Account 137.

Retail and Wholesale sales should be separated and clearly documented for sales tax purposes.

Procedure:

All sales and cost data should be recorded on a subsidiary inventory record. It is recommended that Vehicle Inventory Record DUAS-305 be used for this purpose.

Typical examples of Other Automotive units included in this account are:

A. Snowplows (when sold as an individual used unit, not installed on a vehicle) B. Fifth Wheels (when sold as an individual used unit, not installed on a vehicle) C. All other new items included in Account 134 when sold as individual units not installed on a vehicle.

Typical examples of Non Automotive units included in this account are:

A. Used Tractors B. Used Boats C. Used Motorcycles D. All other used items included in Account 137

All discounts and over allowances should be charged to Discounts and Over Allowances, Account 479-B.

Repossession losses for Non-Automotive units should be charged to this Cost of Sales Account. Any amounts recovered by collection, through the dealership’s recourse action against the customer for the loss sustained due to repossession of the unit, should be credited to this Cost of Sales Account. Such losses on Other Automotive units should be charged to Repossessed Vehicle Losses – Used, Account 480-E in the same manner as regular automotive losses, whether or not installed on the vehicle.

It is recommended that all used Non-Automotive units be individually reappraised each month-end and written down to their current wholesale market value. All writedowns should be charged to this Cost of Sales Account.

In the case of used “Other Automotive” units, any writedowns should be charged to the appropriate vehicle write down account in the same manner as regular used automotive writedowns. The offset of the writedown entries would be the appropriate inventory account.


5-66F FCA (2/18)



CPOV INSURANCE CONTRACTS - USED DEBIT Cost of Sales with:


CREDIT Sales with:


CAUTION: Insurance Contract Income earned on Used Vehicle sales to be recorded in this account.


Procedure:





(2/18) FCA 5-66G

SERVICE DEPARTMENT Sales: Acct. 550-A


CUSTOMER LABOR MECHANICAL


1. The cost of all mechanical labor sold to

FCA customers.

CREDIT Sales with:

1. The actual selling price of all mechanical labor sold to FCA customers on completed repair orders.

CAUTION: Time spent on each operation, or on each repair order, should be recorded through the use of Daily Time and Job Tickets or by the use of a time clock.

This account must be used when performing service work on all FCA cars and trucks.

Procedure:

The balances in these accounts represent productive mechanical labor on completed customer repair orders. All incomplete repair orders are work-in-process and should be handled as outlined in Account 135-A, Labor In Process – Mechanical.

Labor sales and costing procedures should be reviewed periodically to determine if the maximum profit potential is being realized.

Charges made on the repair order for separate items such as "miscellaneous shop supplies," etc., should be included in the gross labor sales price and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expense or as other income unless required by law.

When mechanics are employed on a salary, hourly, or guaranteed basis, the amount paid in excess of their actual productive earnings should be charged to Unapplied/Variance Labor – Mechanical, Account 559-D.

When an employee's time is divided – such as a working Shop Foreman who spends part of his time in a supervisory capacity and the remainder in performing productive labor or a porter who spends part of his time in a productive capacity, e.g., washing cars or new car clean-up, and the remainder performing utility jobs – the salaries and/or wages paid should be appropriately divided between the cost of sales account and the applicable expense account.

Customer repair orders should state specifically the operations to be performed and should be signed by the customer. Each customer repair order should indicate the type of vehicle serviced (passenger car, commercial vehicle, etc.).

All work performed by the Service Department should be authorized and recorded on repair orders.


5-67 FCA (2/18)



SERVICE CONTRACTS LABOR MECHANICAL


1. The cost of all mechanical labor for these sales.

CREDIT Sales with:

1. The actual selling price of all mechanical labor sold under extended service contract plans on completed repair orders.

CAUTION: For a complete explanation of extended service contract plans, procedures, and forms, consult the current FCA Service Contract Guide, or other company's guide.

Time spent on each operation, or on each repair order, should be recorded through the use of Daily Time and Job Tickets or by the use of a time clock.

Procedure:

The balance in this account represents productive mechanical labor on completed repair orders. All incomplete repair orders are work-in-process and should be handled as outlined in Account 135-A, Labor In Process – Mechanical.


Charges made on the repair order for separate items, such as "miscellaneous shop supplies," etc., should be included in the gross labor sales price and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expense or as other income unless required by law.






(2/18) FCA 5-68



WARRANTY LABOR MECHANICAL


1. The cost of all mechanical labor performed

under the factory warranty.

CREDIT Sales with:

1. The amount of all mechanical labor performed under the factory warranty.

CAUTION: Warranty Service and Transportation Claims must be submitted to the factory within the required time after completion of the work. For a complete explanation of warranty policies, procedures and forms, consult the current Warranty and Policy Procedure Manual.

Procedure:

The balances in these accounts represent the mechanical labor for all warranty work performed on completed warranty repair orders and similar documents for claims against FCA and other manufacturers.

Warranty and transportation claims should be recorded in the Warranty Sales Journal and Claims Register, Form DUAS-169.

A separate journal and claims register should be maintained for each manufacturer's products sold by the dealership.


5-69 FCA (2/18)



ROAD READY LABOR


1. The cost of all service and mechanical labor for these sales.

CREDIT Sales with:

1. The amount of all service and mechanical labor performed under FCA Road Ready policy.

2. The amount of all service and mechanical labor performed under other manufacturer's new vehicle preparation policies which are reimbursed by the manufacturer.

CAUTION: Those dealers selling new vehicles other than FCA vehicles should use these accounts for the sale and the cost of sale of new vehicle preparation, provided such service is paid for by the manufacturer.

Procedure:

Accounting personnel should become acquainted with the New Vehicle Preparation section of the current Warranty Policy and Procedure Manual.

The debit offsetting the sale amount for FCA vehicles would be to Account 116A – Factory Receivables: Warranty Claims. Claims against other manufacturers would be charged to Other Receivables – Account 114.

The road ready inspections performed on vehicles in preparation for sale should be charged to this account and the offsetting debit should be made to Account 145F – Prepaid Expense – Other.


(2/18) FCA 5-70



LABOR INTERNAL – MECHANICAL


1. The cost of all internal mechanical labor

performed.

CREDIT Sales with:

1. The internal selling price of all mechanical labor performed for the various departments of the dealership.

CAUTION: Include automotive and non-automotive labor in these accounts.

Internal labor rates should be established by dealership management based upon their individual policies.

Procedure:

The balances in these accounts represent internal mechanical labor on all completed repair orders. All incomplete repair orders are work-in-process and should be handled as outlined in Account 135-A, Labor In Process– Mechanical.

Charges made on the repair order for separate items, such as "miscellaneous shop supplies," etc., should be included in the labor sales price and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expense or as other income unless required by law.

When mechanics are employed on a salary, hourly or guaranteed basis, the amount paid in excess of their actual productive earnings should be charged to Unapplied/Variance Labor – Mechanical, Account 559-D.


Internal repair orders should be authorized by the department manager requesting the work to be performed, indicating the estimated cost or price to be charged.

Time spent on each operation, or on each repair order, should be recorded through the use of Daily Time and Job Tickets, Form DUAS-139, or by use of a time clock.


5-71 FCA (2/18)



CUSTOMER LABOR NON-AUTOMOTIVE


1. The cost of labor sold.

CREDIT Sales with:

1. The actual selling price of all service and mechanical labor performed on non-automotive units.

2. The actual selling price to customers for Wrecker services performed.


Procedure:

The balances in these accounts represent productive labor on completed customer repair orders. All incomplete repair orders are work-in-process and should be handled as outlined in Account 135-A, Labor In Process– Mechanical.



Wreckers may be used solely for service of dealership customers, or they may be contracted for service with expressway authorities, finance companies, etc. Regardless of their use, the sales and costs for this service should be recorded in these accounts when the dealership owns its own Wrecker, and the Service Department has the responsibility for such service.


When an employee's time is divided, such as a working Shop Foreman who spends part of his time in a supervisory capacity and the remainder in performing productive labor or a porter who spends part of his time in a productive capacity, e.g., washing cars or new car clean-up, and the remainder performing utility jobs, the salaries and/or wages paid should be appropriately divided between the cost of sales account and the applicable expense account.

Customer repair orders should state specifically the operations to be performed and should be signed by the customer. Each customer repair order should indicate the type of unit serviced.



(2/18) FCA 5-72



SUBLET WORK – MECHANICAL


1. The cost of all sublet work on these sales.

CREDIT Sales with:

1. The selling price of all mechanical sublet work sold to customers on completed repair orders.

2. The cost of all mechanical sublet work performed for other departments within the dealership.

CAUTION: Warranty and Body and Paint Sublet Work should not be recorded in these accounts.

It is anticipated that sublet work sold to customers will create a gross profit for the dealership. Internal sales prices of sublet work to departments within the dealership should be established by dealership management based upon their individual policies.

Retail, wholesale, and internal sales should be separated and clearly documented for sales and use tax purposes.

Procedure:

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 repair order and/or internally on an 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 charging out all sublet work to the proper sources.

Periodic analyses should be made of all sublet work to ascertain the volume of this type of business and to determine the profitability of doing the work in the dealership rather than subletting it.


5-73 FCA (2/18)



SUBLET WORK – WARRANTY – MECHANICAL



CREDIT Sales with:

1. The selling price of all mechanical sublet work performed under factory warranty.

Procedure:

The balances in these accounts represent mechanical sublet work performed under warranty on completed repair orders for claims against FCA and other manufacturers.

All warranty and transportation claims should be recorded in the Warranty Sales Journal and Claims Register, Form DUAS-169. A separate journal and claims register should be maintained for each manufacturer's products sold by the dealership.


(2/18) FCA 5-74



QUICK SERVICE LABOR MECHANICAL


1. The cost of labor dollars for Quick Lube

repair services.

CREDIT Sales with:

1. The amount of labor sales dollars for Quick Service repairs.

CAUTION:

Procedure:

Quick Service Labor Mechanical repairs include services performed that compete with franchises that are non- FCA repair services. Examples include lube, oil and filter repairs, tire rotation, windshield wiper replacements, parking light, tail light, brake light and turn signal light replacements, air filter replacements, etc.

Cost of labor for Quick Service Labor Mechanical repairs include services performed that compete with franchises that are non-FCA repair services. Examples include lube, oil and filter repairs, tire rotation, windshield wiper replacement, parking light, tail light, brake light and turn signal light replacement, air filter replacements, etc.

The suggested accounting entries are as follows:

Debit Credit COS – Quick Service Labor Mechanical – 558-C Labor in Process – Mechanical – 135-A

Undeposited Cash – 102 Quick Service Labor Mechanical – 558-A


5-75 FCA (2/18)

SERVICE DEPARTMENT Cost of Sales: Acct. 559-D

UNAPPLIED/VARIANCE LABOR – MECHANICAL


1. The wages paid to productive employees for which there is no offsetting revenue or charge to expense (unapplied labor).

2. The difference between actual and standard labor rate applications–actual rate greater (variance labor).

3. The adjustment required when the productive labor on incomplete repair orders is less than the balance in the Labor In Process - Mechanical inventory.


1. The difference between standard and actual labor rate applications – standard rate greater (variance labor).

2. The adjustment required when the productive labor on incomplete repair orders is greater than the balance in the Labor In Process – Mechanical inventory.

CAUTION: Productive mechanical labor should be controlled through Labor In Process – Mechanical, Account 135- A.

Unapplied labor represents a failure to supply the mechanic with a sufficient amount of productive work whereas variance labor represents the difference between the standard and actual labor rate applications. Both are reflections against the Service Department and, therefore, should be carefully controlled. These variances will generally occur in all types of productive mechanic compensation plans except the percentage split.

Procedure:

In order that charges to this account may be minimized, it is recommended that Daily Time and Job Tickets, Form DUAS-139, or a time clock showing time on and time off each job or operation be used by all mechanics and that studies be made of each mechanic's productivity.

When productive mechanics are paid for time on the premises for which no productive labor was performed, this pay is considered unapplied time and should be charged to this account. This does not include vacation and time- off pay, or non-productive pay which is chargeable internally to an expense account. Said in another way, unapplied time is the amount of mechanic's compensation which has not been accounted for as productive or non-productive labor.

Variance labor represents the difference between the "Standard Labor Rate" used to cost labor (on repair orders) and the actual productive labor costs (paid the mechanic). In other words, the labor variance represents the difference between the standard and actual wage rates. This difference should also be charged or credited to this account.

When productive mechanics are paid on a flat-rate basis, with a guaranteed minimum wage, this is a form of Standard Labor Rate costing; the difference between the total amount earned on productive labor and the guaranteed wage should be charged to this account.

Minimal differences between the monthly book and physical inventories of mechanical labor in process should be debited or credited to this account.

If abnormal unapplied labor or variance labor continues to exist, it may be an indication of inefficiency, inaccurate costing, etc., and should be promptly investigated and analyzed.


(2/18) FCA 5-76



CUSTOMER LABOR – BODY AND PAINT


1. The cost of all body and paint labor on these

sales.

CREDIT Sales with:

1. The actual selling price of all body and paint labor performed on customers' cars and trucks.

2. The actual selling price of all undercoat and polish labor performed on customers' cars and trucks.

CAUTION: These accounts should be used only by dealerships having their own body and paint operation.


Due to the structure of sales and use taxes in most states, the sales of labor and shop materials should not be combined.

Procedure:

The balances in these accounts represent productive body and paint labor on all completed repair orders. All incomplete body and paint repair orders are work-in-process and should be handled as outlined in Account 135-B, Labor In Process–Body and Paint.



When body and paint men are employed on a salary, hourly, or guaranteed basis, the amount paid, if any, in excess of their actual productive earnings should be charged to Unapplied/Variance Labor – Body and Paint, Account 567- D.

When an employee's time is divided, such as a working Shop Foreman who spends part of his time in a supervisory capacity and the remainder in performing productive labor or a porter who spends part of his time in a productive capacity, e.g., polishing cars, and the remainder performing utility jobs – the salaries and/or wages paid should be appropriately divided between the cost of sales account and the applicable expense account.

Customer repair orders should state specifically the operations to be performed and should be signed by the customer.

All work performed by the Body and Paint Department should be authorized and recorded on repair orders.


5-77 FCA (2/18)



WARRANTY LABOR – BODY AND PAINT


1. The cost of all such labor.

CREDIT Sales with:

1. The amount of all body and/or paint labor performed under the manufacturer's warranty.


Warranty Service and Transportation claims must be submitted to the factory within the required time after completion of the work. For a complete explanation of warranty policies, procedures and forms, consult the current Warranty and Policy Procedure Manual.

Procedure:

The balances in these accounts represent the body and paint labor for all warranty work performed on completed warranty repair orders and similar documents for claims against FCA and other manufacturers.

Warranty claims should be recorded in the Warranty Sales Journal and Claims Register, Form DUAS-169.

A separate journal and claim register should be maintained for each manufacturer’s products sold by the dealership.


(2/18) FCA 5-78



LABOR INTERNAL – BODY AND PAINT


1. The cost of all internal body and paint labor.

CREDIT Sales with:

1. The internal selling price of all body and paint labor performed for the various departments of the dealership.



Procedure:

The balances in these accounts represent internal body and paint labor on all completed repair orders. All incomplete repair orders are work-in-process and should be handled as outlined in Account 135-B, Labor In Process – Body and Paint.


When body and paint employees are employed on a salary, hourly, or guaranteed basis, the amount paid in excess of their actual productive earnings should be charged to Unapplied/Variance Labor – Body and Paint, Account 567- D.

When an employee's time is divided, such as a working Shop Foreman who spends part of his time in a supervisory capacity and the remainder in performing productive labor or a porter who spends part of his time in a productive capacity, e.g., polishing cars, and the remainder performing utility jobs – salaries and/or wages paid should be appropriately divided between the cost of sales account and the applicable expense account.


Time spent on each operation, or on each repair order, should be recorded through the use of Daily Time and Job Tickets, Form DUAS-139, or by use of a time clock.


5-79 FCA (2/18)



SUBLET WORK – BODY AND PAINT



CREDIT Sales with:

1. The selling price of all body and paint sublet work sold to customers on completed repair orders.

2. The cost of all body and paint sublet work performed for other departments within the dealership.

CAUTION: Warranty and Mechanical Sublet Work should not be recorded in these accounts.

It is anticipated that sublet work sold to customers will create a gross profit for the dealership. Internal sales prices of sublet work to departments within the dealership should be established by dealership management based upon their individual policies.

Retail, wholesale, and internal sales should be separated and clearly documented for sales and use tax purposes.

Procedure:

Individual purchases of sublet work should be authorized by a properly executed purchase order. The purchase order should be issued from 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- reference purposes.

Care must be exercised to assure all sublet work is charged on a customer repair order and/or internally on an 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 charging out all sublet work to the proper sources.

Periodic analyses should be made of all sublet body and paint work to ascertain the volume of this type of business and to determine the profitability of doing the work in the dealership, rather than subletting it.


(2/18) FCA 5-80



SUBLET WORK – WARRANTY – BODY AND PAINT


1. The cost of all sublet work for these sales.

CREDIT Sales with:

1. The selling price of all body and paint sublet work performed under factory warranty.

Procedure:

The balances in these accounts represent body and paint sublet work performed under warranty on completed repair orders for claims against FCA and other manufacturers.

All warranty and transportation claims should be recorded in the Warranty Sales Journal and Claims Register, Form DUAS-169. A separate journal and claims register should be maintained for each manufacturer's products sold by the dealership.


5-81 FCA (2/18)



BODY AND PAINT SHOP MATERIALS


1. The cost of all shop materials, including: undercoating, rubbing compounds, etc. sold and used.

2. The adjustment necessary when the physical inventory is different from the account (book) balance. (Debit for shortages and credit for overages.)

CREDIT Sales with:

1. The actual selling price of all body and paint shop materials sold:

A. To dealership customers B. On warranty service claims C. To other departments within the

dealership.


Due to sales and use tax regulations, the sale of labor and material for retail, wholesale, and internal sales should be separated and clearly documented.

With respect to internal sales to other departments within the dealership, actual selling price, as determined by the dealership, should not exceed the retail selling price.

Procedure:

It is recommended that materials be individually costed on each repair order; however, materials may be costed on a percentage basis, developed by experience.

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.


(2/18) FCA 5-82

SERVICE DEPARTMENT Cost of Sales: Acct. 567-D

UNAPPLIED/VARIANCE LABOR – BODY AND PAINT


1. The wages paid to productive employees for which there is no offsetting revenue or charge to expense (unapplied labor).

2. The adjustment required when the productive labor on incomplete repair orders is less than the balance in the Labor In Process – Body and Paint Inventory.

3. The difference between actual and standard labor rate applications – actual rate greater (variance labor).


1. The adjustment required when the productive labor on incomplete repair orders is greater than the balance in the Labor In Process – Body and Paint Inventory.

2. The difference between standard and actual labor rate applications – standard rate greater (variance labor).

CAUTION: Productive body and paint labor should be controlled through Labor In Process–Body and Paint, Account 135-B.

Unapplied labor represents a failure to supply the body and paint employees with a sufficient amount of productive work whereas variance labor represents the difference between standard and actual labor rate applications. Both should be carefully controlled. These variances will generally occur in all types of compensation plans except the percentage split.

Procedure:

In order that charges to this account may be minimized, it is recommended that Daily Time and Job Tickets, Form DUAS-139, or a time clock showing time on and time off each job be used by all employees and that studies be made of each employee's productivity.

When productive body and paint employees are paid for time on the premises for which no productive labor was performed, this pay is considered unapplied time and should be charged to this account. This does not include vacation and time-off pay, or nonproductive pay which is chargeable internally to an expense account. Said in another way, unapplied time is the amount of body and paint employees' compensation which has not been accounted for as productive or non-productive labor.

Variance labor represents the difference between the "Standard Labor Rate" used to cost labor (on repair orders) and the actual productive labor costs (paid the mechanic). In other words, the labor variance represents the difference between the standard and actual wage rates. This difference should also be charged or credited to this account.

When productive employees are paid on a flat-rate basis, with a guaranteed minimum wage, the difference between the total amount earned on productive labor and the guaranteed wage should be charged to this account.

Minimal differences between the monthly book and physical inventories of labor in process should be debited or credited to this account.

If abnormal unapplied labor continues to exist, it may be an indication of inefficiency, inaccurate costing, etc., and should be promptly investigated and analyzed.


5-83A FCA (2/18)

SERVICE DEPARTMENT Sales: Cost of Sales:


SERVICE CONTRACTS – SOLD ON SERVICE LANE


1. The amount paid by the dealership for: • FCA Service Contracts • Extended Protection Plans

2. Charge backs due to Early Termination

3. Receipt of the objective based program monies:

• Bonus Bank Program

CREDIT Sales with:

1. The selling price of: • FCA Service Contracts • Extended Protection Plans • XPS Incentive

CAUTION: For a complete explanation of extended service contract plans, procedures, and forms, consult the current FCA Service Contract Guide, or other company’s guides.

Procedure:



(2/18) FCA 5-83B

PARTS & ACCESSORIES DEPARTMENT Sales: Cost of Sales:


PARTS AND ACCESSORIES – REPAIR ORDERS – MECHANICAL


1. The inventory value of parts and accessories sold.

CREDIT Sales with:

1. The sales price of parts and accessories sold to customers on completed repair orders.

CAUTION: Parts and accessories should be costed individually at the time of sale. It is recommended that all parts and accessories sold be costed individually at the Dealer price. A percentage method of costing is not recommended (refer to Account 130).

Procedure:

The balances in these accounts represent all passenger car and truck mechanical parts and accessories sold to customers on completed repair orders.

Parts and accessories previously written off the books as obsolete should reflect no cost when sold. The sales of these items should be recorded in the proper sales account.

Parts should only be withdrawn from inventory upon presentation of the hard copy of the repair order to the Parts Department.


5-84 FCA (2/18)

PARTS & ACCESSORIES DEPARTMENT Sales: Acct. 571-A


PARTS AND ACCESSORIES – SERVICE CONTRACTS – MECHANICAL


1. The inventory value of parts and accessories

for these sales.

CREDIT Sales with:

1. The sales price of parts and accessories sold under extended service contract plans on completed repair orders.


Parts and accessories should be costed individually at the time of sale. It is recommended that all parts and accessories sold be costed individually at the Dealer price. A percentage method of costing is not recommended (refer to Account 130).

Procedure:

The balances in these accounts represent all passenger car and truck parts and accessories sold under extended service contracts on completed repair orders.




(2/18) FCA 5-85



PARTS AND ACCESSORIES – WARRANTY – MECHANICAL


1. The inventory value of all such parts and accessories.

CREDIT Sales with:

1. The sales price of all parts and accessories replaced under factory warranty.

Procedure:

The balances in these accounts represent the parts and accessories for all warranty work performed on completed warranty repair orders and similar documents for claims against FCA and other manufacturers.

All warranty and transportation claims should be recorded in the Warranty Sales Journal and Claims Register, Form DUAS-169.


Warranty service and transportation claims must be submitted to the factory within the required time after completion of the work in accordance with instructions in the Dealer Warranty and Policy Procedure Manual.


5-86 FCA (2/18)



PARTS AND ACCESSORIES – RETAIL


1. The inventory value of all over-the-counter

sales.

CREDIT Sales with:

1. The sales price of all automotive parts and accessories sold over the counter to retail customers.

CAUTION: Parts and accessories should be costed individually at the time of sale. It is recommended that all parts and accessories sold be costed individually at the Dealer price. A percentage method of costing is not recommended (refer to Account 130).

Procedure:

The balances in these accounts represent all automotive parts and accessories sold at retail to customers on parts counter invoices.



(2/18) FCA 5-87



PARTS AND ACCESSORIES – WHOLESALE


1. The cost of all such automotive parts and accessories sold.

CREDIT Sales with:

1. The sales price of all automotive parts and accessories sold over the counter to customers for resale.

2. The sales price of all automotive parts and accessories sold to fleet accounts over the counter.

CAUTION: Parts and accessories should be costed individually, at the time of sale. It is recommended that parts and accessories be costed individually at Dealer prices. A percentage method of costing is not recommended (refer to Account 130).

Procedure:

The balances in these accounts represent all over-the-counter sales (for resale) to garages, service stations, body and paint shops, other dealers, fleet accounts, etc.


5-88 FCA (2/18)



PARTS AND ACCESSORIES – INTERNAL – MECHANICAL


1. The cost of all such parts and accessories

sold.

CREDIT Sales with:

1. The internal selling price of all automotive parts and accessories sold to departments within the dealership.

CAUTION: Parts and accessories related to Non-Automotive Merchandise (Account 137) should not be included in these accounts; see Non-Automotive and Miscellaneous, Account 595-A and C.

Internal sales prices of parts and accessories should be established by dealership management based upon their individual policies.

Procedure:

The balances in these accounts represent all mechanical automotive parts and accessories (sold) used internally on completed repair orders and counter invoices.

Internal repair orders should be authorized by the department manager requesting the work to be performed, indicating the authorized amount to be charged.


(2/18) FCA 5-89



PARTS AND ACCESSORIES – QUICK SERVICE – OIL - LUBRICANTS


1. The cost of parts associated with/for quick service repairs.

CREDIT Sales with:

1. The amount of parts and accessories dollars associated with/for quick lube service repairs.

CAUTION:

Procedure:

Parts and accessories sales dollars generated from/associated with Quick Service Labor Mechanical repairs. These repairs include services performed that compete with franchises that are non-FCA repair services. Examples include lube, oil and filter repairs, tire rotation, windshield wiper replacement, parking light, tail light, brake light and turn signal light replacements, air filter replacements, etc.

Cost in dollars of parts and accessories generated from/associated with Quick Service Labor Mechanical repairs. These repairs include services performed that compete with franchises that are non-FCA repair services. Examples include lube, oil and filter repairs, tire rotation, windshield wiper replacement, parking light, tail light, brake light and turn signal light replacements, air filter replacements, etc.

The suggested accounting entries are as follows:

Debit Credit COS – P & A Quick Service Oil-Lubricants – 576-C Parts and Accessories – FCA – 130 (if applicable)

Parts and Accessories – Other MFG – 131 (if applicable) Parts and Accessories – Quick Service-Oil-Lubricants – Parts and Accessories – Gas, Oil and Lubricants –

136-A (if applicable)

Undeposited Cash – 102 Parts and Accessories Quick Service-Oil-Lubricants – 576


5-90A FCA (2/18)

SERVICE DEPARTMENT Sales: Acct. 577-A Cost of Sales: Acct. 577-C

SERVICE CONTRACTS – SOLD AT PARTS COUNTER


1. The amount paid by the dealership for:

• FCA Service Contracts • Extended Protection Plans

2. Charge backs due to Early Termination

3. Receipt of the objective based program monies:

• Bonus Bank Program

CREDIT Sales with:

1. The selling price of: • FCA Service Contracts • Extended Protection Plans • XPS Incentive

CAUTION: For a complete explanation of extended service contract plans, procedures, and forms, consult the current FCA Service Contract Guide, or other company’s guides.

Procedure:



(2/18) FCA 5-90B



PARTS AND ACCESSORIES – REPAIR ORDERS – BODY & PAINT


1. The inventory value of all such parts and accessories sold.

CREDIT Sales with:

1. The sales price of all parts and accessories sold to customers on completed repair orders for vehicle body and paint repairs.

CAUTION: These accounts should be used only by dealerships having their own body and paint operations.


Procedure:

The balances in these accounts represent all parts and accessories (excluding shop materials) sold to customers on completed body and paint repair orders.


Parts and accessories should only be withdrawn from inventory upon presentation of the hard copy of the repair order to the Parts Department.


5-91 FCA (2/18)



PARTS AND ACCESSORIES – WARRANTY – BODY & PAINT


1. The inventory value of all such body parts

and accessories sales.

CREDIT Sales with:

1. The sales price of all body parts and accessories replaced under factory warranty by the body and paint shop.


Procedure:

The balances in these accounts represent the parts and accessories for all body and paint warranty work performed on completed warranty repair orders and similar documents for claims against FCA and other manufacturers.

Warranty and transportation claims should be recorded in the Warranty Sales Journal and Claim Register, Form DUAS-l69.

A separate journal and claim register should be maintained for each manufacturer's products sold by the dealership.

Warranty service and transportation claims must be submitted to the factory within the required time after completion of the work in accordance with instructions in the Dealer Warranty and Policy Procedure Manual.


(2/18) FCA 5-92



PARTS AND ACCESSORIES – INTERNAL – BODY & PAINT


1. The cost of all such parts and accessories sold.

CREDIT Sales with:

1. The internal selling price of all automotive parts and accessories sold to departments within the dealership.



Procedure:

The balances in these accounts represent all body & paint automotive parts and accessories (sold) used internally on completed repair orders and counter invoices.

Internal repair orders should be authorized by the department manager requesting the work to be performed, `indicating the authorized amount to be charged.


5-93 FCA (2/18)

PARTS & ACCESSORIES DEPARTMENT

Cost of Sales: Acct. 585-E

PURCHASE DISCOUNTS – PARTS AND ACCESSORIES


1. The amount of all discounts lost as the result

of returning parts and/or accessories to the manufacturer.


1. The amount of all trade and/or quantity discounts received for purchasing parts and/or accessories.

2. The amount of credits received for any remaining parts return allowances.

CAUTION: The stock order allowance and accessory order-pad additional discount earned from FCA are the types of purchase discounts that should be recorded in this account.

Care should be exercised when recording accessories discounts since accessories may be purchased and inventoried at any one of a number of Dealer prices. (Refer to Account 130 for additional information.)

Procedure:

This account is a measure of the efficiency of parts management in that it readily indicates if parts and accessories are being ordered in sufficient quantities to permit maximum discounts.

The Parts Return Allowance Plan provides for a cycle carry forward/credit program wherein a credit is applied to the dealer's parts account for a portion of the remaining allowance over returns. These credits should be applied to this account.


(2/18) FCA 5-94

PARTS & ACCESSORIES DEPARTMENT Cost of Sales:

WHOLESALE ALLOWANCE Acct. 586-F


1. The amount of Wholesale Allowance earned on applicable parts sales.

CAUTION: Accounting instructions for the Wholesale Allowance Plan are detailed in Wholesale Compensation – Parts, Account 116-E.

Procedure:

Dealers must submit applications for wholesale compensation in accordance with established instructions and procedures, and on the forms provided for that purpose.


5-95 FCA (2/18)

PARTS & ACCESSORIES DEPARTMENT Cost of Sales: Acct. 587-G

PARTS AND ACCESSORIES – INVENTORY ADJUSTMENTS


1. The monthly provision for anticipated inventory losses and obsolescence.

2. The adjustment required to decrease the book value to agree with the physical inventory value.


1. The amount of any decrease in the total provision.

2. The adjustment required to increase the book value to agree with the physical inventory value.

Procedure:

The balance in this account represents the accumulated provision for parts and accessories inventory losses due to shrinkage and obsolescence. This balance should be adjusted at year-end to reflect actual shrinkage and obsolescence as disclosed by physical inventory.

There are various ways and methods of establishing shrinkage and obsolescence allowances. Some of these are mentioned in Inventory Adjustments – Parts and Accessories, Account 132.

The offsetting entry for the monthly provision should be to Inventory Adjustments – Parts and Accessories, Account 132.


(2/18) FCA 5-96



TIRES AND TUBES


1. The inventory value of tires and tubes sold. 2. The adjustment for any differences (short-

ages/overages) between the monthly book and physical inventory values.

CREDIT Sales with:

1. The sales price of all tires and tubes sold to customers.

2. The internal selling price of all tires and tubes sold to departments within the dealership.

CAUTION: The retail, wholesale, and internal sales should be separated and clearly documented for sales and use tax purposes.

Tires and tubes should be costed individually at the time of sale.

The internal sales prices of tires and tubes should be established by dealership management based upon their individual policies.

Procedure:

The sale and cost of tires transferred between vehicles should not be included in this account. These transactions should be treated as "inventory Transfers."

The sale and cost of special tires installed on a new vehicle at the time of sale should not be included in this account. These transactions should be treated as "inventory Transfers."

Perpetual inventory records should be maintained daily to provide maximum inventory control and to aid in maintaining a balanced inventory that will produce maximum profits.


5-97 FCA (2/18)



MOPAR EXPRESS LANE CP PARTS DEBIT Cost of Sales with:

1. The inventory value of parts and accessories sold.

CREDIT Sales with: 1. The sales price of parts and accessories

sold to customers on completed repair orders through Mopar Express Lane.

CAUTION: Parts and accessories should be costed individually at the time of sale. It is recommended that all parts

and accessories sold be costed individually at the Dealer price. A percentage method of costing is not recommended (refer to Account 130).

Only Dealers validated for Mopar Express Lane should use this account.

Procedure: The balances in these accounts represent all Mopar Express Lane parts and accessories sold to customers on completed repair orders. Parts and accessories previously written off the books as obsolete should reflect no cost when sold. The sales of these items should be recorded in the proper sales account. Parts should only be withdrawn from inventory upon presentation of the hard copy of the repair order to the Parts Department.


(2/18) FCA 5-98A



MOPAR EXPRESS LANE – SERVICE CONTRACTS PARTS


1. The inventory value of parts and accessories

for these sales.

CREDIT Sales with:

1. The sales price of parts and accessories sold under extended service contract plans on completed repair orders using Mopar Express Lane.




Procedure:

The balances in these accounts represent all passenger car and truck parts and accessories sold under extended service contracts on completed repair orders.




5-98B FCA (2/18)



MOPAR EXPRESS LANE – WARRANTY – PARTS DEBIT Cost of Sales with:

1. The inventory value of all such parts and accessories.

CREDIT Sales with: 1. The sales price of all parts and

accessories replaced under factory warranty through Mopar Express Lane.

CAUTION: Only Dealers validated for Mopar Express Lane should use this account.

Procedure: The balances in these accounts represent the parts and accessories for all warranty work performed on completed warranty repair orders and similar documents for claims against FCA and other manufacturers. All warranty and transportation claims should be recorded in the Warranty Sales Journal and Claims Register, Form DUAS-169. A separate journal and claims register should be maintained for each manufacturer's products sold by the dealership. Warranty service and transportation claims must be submitted to the factory within the required time after completion of the work in accordance with instructions in the Dealer Warranty and Policy Procedure Manual.


(2/18) FCA 5-98C



MOPAR EXPRESS LANE – INTERNAL PARTS


1. The cost of all such parts and accessories

sold.

CREDIT Sales with:

1. The internal selling price of all automotive parts and accessories sold to departments within the dealership through Mopar Express Lane.




Procedure:

The balances in these accounts represent all Mopar Express Lane mechanical automotive parts and accessories (sold) used internally on completed repair orders and counter invoices.

Internal repair orders should be authorized by the department manager requesting the work to be performed, indicating the authorized amount to be charged.


5-98D FCA (2/18)



NON-AUTOMOTIVE AND MISCELLANEOUS


1. The cost of all such parts and accessories sold.

CREDIT Sales with:

1. The retail, wholesale, or internal selling price of all (non-automotive) parts, accessories, and related items.

2. The retail, wholesale, or internal selling price of all merchandise not otherwise provided in the Chart of Accounts.

CAUTION: Retail, wholesale, and internal sales should be separated and clearly documented for sales and use tax purposes.

Sales of parts and accessories for Other Automotive Inventories, Account 134, should not be handled through this account. These items are handled in the same manner as regular automotive parts and accessories.

Internal sales prices of non-automotive parts, accessories and related items should be established by dealership management based upon their individual policies.

Procedure:

Parts, accessories, and related items, for Non-Automotive units in Account 137, should be handled in the same manner as all parts and accessories inventories in respect to internal controls. However, sales and cost of sales for these items should be recorded in this sales and cost account.

Merchandise recorded in this account should be costed individually, at the time of sale. Cost data should be obtained from the respective unit inventory record.

It is important that sales invoices be properly prepared, separately identifying the appropriate inventory accounts to be credited.

Merchandise previously written off the books as obsolete should reflect no cost when sold.


(2/18) FCA 5-99



MOPAR EXPRESS LANE CP LABOR


1. The cost of all mechanical labor sold to

Mopar Express Lane customers.

CREDIT Sales with:

1. The actual selling price of all mechanical labor sold to Mopar Express Lane customers on completed repair orders.


This account must be used when performing service work on all Chrysler cars and trucks.


Procedure:

The balances in these accounts represent productive mechanical labor on completed customer repair orders. All incomplete repair orders are work-in-process and should be handled as outlined in Account 135-A, Labor In Process – Mechanical.


Charges made on the repair order for separate items such as "miscellaneous shop supplies," etc., should be included in the gross labor sales price and reported in this sales account for accounting purposes. Such items should not be considered as offsetting credits to expense or as other income unless required by law.






5-100A FCA (2/18)



MOPAR EXPRESS LANE SERVICE CONTRACTS LABOR


1. The cost of all mechanical labor for these sales.

CREDIT Sales with:

1. The actual selling price of all mechanical labor sold under extended service contract plans on completed repair orders through Mopar Express Lane.




Procedure:

The balance in this account represents productive mechanical labor on completed repair orders. All incomplete repair orders are work-in-process and should be handled as outlined in Account 135-A, Labor In Process – Mechanical.








(2/18) FCA 5-100B

SERVICE DEPARTMENT Sales:

Acct. 598-A


MOPAR EXPRESS LANE WARRANTY LABOR


1. The cost of all mechanical labor performed under the factory warranty.

CREDIT Sales with:

1. The amount of all mechanical labor performed under the factory warranty.

CAUTION: Warranty Service and Transportation Claims must be submitted to the factory within the required time after completion of the work. For a complete explanation of warranty policies, procedures and forms, consult the current Warranty and Policy Procedure Manual.


Procedure:

The balances in these accounts represent the mechanical labor for all warranty work performed on completed warranty repair orders and similar documents for claims against FCA and other manufacturers.

Warranty and transportation claims should be recorded in the Warranty Sales Journal and Claims Register, Form DUAS-169.



5-100C FCA (2/18)



MOPAR EXPRESS LANE LABOR INTERNAL


1. The cost of all internal mechanical labor performed.

CREDIT Sales with:

1. The internal selling price of all mechanical labor performed for the various departments of the dealership.




Procedure:

The balances in these accounts represent internal mechanical labor on all completed repair orders. All incomplete repair orders are work-in-process and should be handled as outlined in Account 135-A, Labor In Process– Mechanical.


When mechanics are employed on a salary, hourly or guaranteed basis, the amount paid in excess of their actual productive earnings should be charged to Unapplied/Variance Labor – Mechanical, Account 559-D.



Time spent on each operation, or on each repair order, should be recorded through the use of Daily Time and Job Tickets, Form TT-139-DUAS, or by use of a time clock.


(2/18) FCA 5-100D

OTHER INCOME Cost of Sales: Acct. 466-C

DOC FEE/ADMINISTRATIVE FEE - NEW


1.

CREDIT Sales with:

1. Administrative Fee charged by the dealer on the sale of each new vehicle (document fees, etc.).

2. Administrative Fee charged by F&I.

CAUTION:

Procedure:

Any document fee or administrative fee collected for the sale of new vehicle, service contract or finance contract sold in the new vehicle department should be reported in this account.


(2/18) FCA 6-1

OTHER INCOME Cost of Sales: Acct. 488-C

DOC FEE/ADMINISTRATIVE FEE - USED


1.

CREDIT Sales with:

1. Administrative Fee charged by the dealer on the sale of each used vehicle (documentation fees, etc.).

2. Admin. fee charged by F&I.

CAUTION:

Procedure:

Any document fee or administrative fee collected for the sale of used vehicle, service contract or finance contract sold in the used vehicle department should be reported in this account.


6-2 FCA (2/18)

OTHER INCOME Account 601

CASH DISCOUNTS EARNED


1. The amount of cash discounts earned by payment of vendor's invoices within the specified period of time.

CAUTION: Discounts which are not dependent upon prompt payment (more commonly known as Trade Discounts or Quantity Purchase Discounts) should not be recorded in the account.

Procedure:

The balance in this account represents only cash discounts earned by payment of vendors' invoices within the discount period.

(2/18)


FCA 6-3

OTHER INCOME Account

INTEREST EARNED 603


1. The amount of all interest and/or the dividends earned.

Procedure:

This account would include interest and/or dividends earned from: Excess cash on deposit (see Account 104) Customer notes (see Account 112) Marketable securities (see Account 140) Other assets and investments (see Account 157)


FCA

(2/18)


GAIN ON DISPOSAL OF CAPITAL ASSETS


1. The profits resulting from sale of marketable securities, other assets, investments, land, buildings, and equipment.

CAUTION: This account should not be used to record profits from the sale of demonstrator or lease vehicles.

Procedure:

Credits to this account include the gain on sale of such items as: Land Buildings Building equipment Machinery Equipment Signs Company and service vehicles Marketable securities Other assets and investments

Detailed subsidiary ledgers or schedules should be currently maintained, indicating the necessary data for each type of sale and gain of the various assets.

Outside tax and legal counsel should be obtained relative to the proper handling of investments.

Losses on sale of Marketable Securities, Other Assets and Investments, and Capital Assets should be recorded in Other Deductions–Loss on Disposal of Capital Assets, Account 708.

(2/18)


FCA 6-5


MISCELLANEOUS INCOME

DEBIT with:

1. Any reductions in income previously recorded in this account.

CREDIT with:

1. All income not otherwise classified or provided in the Chart of Accounts.

CAUTION: 1) Document/Admin Fee received during the sale of a new or used vehicle should not be recorded in this account. 2) Volume growth incentives received should not be reported in this account.

Procedure:

Income may include profits or proceeds derived from such transactions as:

1. Floor Plan Allowance payments received from the factory for vehicles not floor planned (refer to Account 116-D).

2. Dealer Transfers of non-automotive units. Dealer Transfers of new cars and Trucks should be recorded on Line 62 of Page 3.

3. Unredeemed service coupons and performance guarantees. 4. Vending machine, waste oil, and scrap metal sales. 5. Vehicle license and title fees; lien filing, recording and service fees;

cash overages. 6. Other investments (refer to Account 157). 7. Finance and insurance income earned in connection with the sale of new and used non-

automotive units (Account 137). Any reductions due to early payoff, cancellation, repossession, etc., should be charged to this account.

A Distribution Sheet may be used to accumulate totals of the various items of a similar nature; to expedite detailing for audit and tax purposes. The individual item "totals" on the Distribution Sheet should be combined so as to arrive at one total for financial statement purposes.


FCA

(2/18)

OTHER INCOME Account

L.I.F.O. ADJUSTMENTS 610


1. The amount of adjustment needed to decrease the reserve as determined from the L.I.F.O. valuation.

CAUTION: This account is provided for those dealerships adopting the LAST-IN, FIRST-OUT (LIFO) Method Inventory Valuation.


Procedure:


Normally entries are made only at year-end. If the LIFO adjustment needs to be decreased, the adjusting entry would be made to credit account 610 and debit account 268.

Be sure to reflect the LIFO adjustments on the 12th month financial statement (estimated if necessary) as well as on the final/certified financial statement.

(2/18)


FCA 6-7


VEHICLE LEASE AND RENTAL INCOME


1. The total vehicle lease and rental income as recorded in the sub-account.

CAUTION: This is a control account and should be supported by subsidiary accounts and their related records.

Refer to Manual Section A7–Leasing for additional information.

Procedure:

All income derived from lease and rental vehicles (including daily rental vehicles to service customers) should be handled through the following subsidiary accounts:

Account 803-8 Lease Income Account 807-8 Rental Income Account 809-8 Gain or Loss on (L&R) Vehicles

It is recommended that the supporting subsidiary accounts be maintained in the general ledger for control purposes. The balances in these subsidiary accounts should be combined and reported as this control account when preparing the monthly financial statement. Only the combined total income should be reported as "Vehicle Lease and Rental Income" (A/C 615) on the financial statement.

For control purposes, the combined total of the subsidiary accounts (800 series) may be penciled in the ledger sheet established for this account. However, the subsidiary accounts should be closed into the control account only at year-end.


FCA

(2/18)

OTHER DEDUCTIONS Account 701

CASH DISCOUNTS ALLOWED

DEBIT with:

1. The amount of all cash discounts allowed to customers for prompt payment of their accounts.

CREDIT with:

CAUTION: Discounts which are not dependent upon prompt payment should not be included in this account.

Procedure:

The balance in this account represents cash discounts allowed to customers within the discount period as established by the dealership.

(2/18)


FCA 6-9

OTHER DEDUCTIONS Account

BONUSES 704

DEBIT with:

1. The amount of all bonuses, paid or accrued, over and above regular agreed-upon compensation.

CREDIT with:

CAUTION: Incentives and overrides (not based upon the dealership's overall profit) should be recorded in the applicable departmental commissions and incentives account.

Procedure:

Bonuses which are based upon the dealership profit should be recorded monthly. These would include bonuses payable to:

Corporation officers Partners (actively engaged in dealership management) Department heads Other employees

Bonuses are generally paid once a year. However, a monthly provision should be made. Account 210-A should be used to record the offsetting accrued liability.


FCA

(2/18)


LOSS ON DISPOSAL OF CAPITAL ASSETS

DEBIT with:

1. The losses resulting from sale of marketable securities, other assets, investments, land, buildings, and equipment.

CREDIT with:

CAUTION: This account should not be used to record losses from the sale of demonstrator or lease vehicles.

Procedure:

Debits to this account include the losses on sale of such items as: Land Buildings Building equipment Machinery Equipment Signs Company and service vehicles Marketable securities Other assets and investments

Detailed subsidiary ledgers or schedules should be currently maintained, indicating the necessary data for each type of sale and loss of the various assets.

Outside tax and legal counsel should be obtained relative to the proper handling of investments.

Profits on sales of Marketable Securities, Other Assets and Investments, and Capital Assets should be recorded in Other Income–Gain on Disposal of Capital Assets, Account 608.

(2/18)


FCA 6-11


MISCELLANEOUS DEDUCTIONS

DEBIT with:

1. All deductions of a miscellaneous nature not otherwise provided for in the Chart of Accounts.

CREDIT with:

Procedure:

Such deductions from income include losses resulting from: 1. Transfers of new cars and trucks from other dealers. 2. Transfers of non-automotive units from other dealers. 3. Repair amounts in excess of performance guarantee contracts. 4. Excess repair amounts on service coupons. 5. Operating losses stemming from other investments, (Account 157). 6. Tickets for traffic violations. 7. Bank charges, cash shortages. 8. Excess of premiums paid (over that portion of premiums representing the increase in cash

surrender value) on life insurance policies where the dealership is the beneficiary (refer to Account 154).

9. Cost for disposal of toxic waste materials.

A Distribution Sheet may be used to accumulate totals of the various items of a similar nature; so as to expedite detailing for audit and tax purposes. The individual item "totals" on the Distribution Sheet should be combined so as to arrive at one total for financial statement purposes.


FCA

(2/18)

OTHER DEDUCTIONS Account

L.I.F.O. ADJUSTMENTS 710

DEBIT with:

1. The amount of adjustment needed to increase the reserve as determined from the L.I.F.O. Valuation.

CREDIT with:

CAUTION: This account is provided for those dealerships adopting the LAST-IN, FIRST-OUT (LIFO) Method Inventory Valuation.


Procedure:


Normally entries are made only at year-end. If the LIFO adjustment needs to be increased, the adjusting entry would be made to debit account 710 and credit account 268.

Be sure to reflect the LIFO adjustments on the 12th month financial statement (estimated if necessary) as well as on the final/certified financial statement.

(2/18)


FCA 6-13


VEHICLE LEASE AND RENTAL EXPENSE

DEBIT with:

1. The total vehicle lease and rental expenses as recorded in the sub-accounts.

CREDIT with:

CAUTION: This is a control account and should be supported by subsidiary records.

Refer to Manual Section A7–Leasing for additional information.

Procedure:

All transactions of an expense nature relative to lease and rental vehicles (including daily rental vehicles to service customers) should be handled through the following expense subsidiary accounts:

ACCOUNT NUMBER

EXPENSES

920-8

DIRECT Gasoline

922-8 Maintenance and Repairs 927-8 Licenses, Titles, and Taxes 928-8 Depreciation 929-8 Insurance 930-8 Interest

SELLING 940-8 Salaries, Wages, and Commissions 945-8 Company Cars 947-8 Pick-up and Delivery 949-8 Advertising and Promotion 951-8 Bad Debts 955-8 Miscellaneous

It is recommended that the supporting detailed subsidiary accounts be maintained in the general ledger for control purposes. The balances in these subsidiary accounts should be combined and reported as this control account when preparing the monthly financial statement. Only the combined total expenses should be reported as "Vehicle Lease and Rental Expense" (A/C 715), on the financial statement. For control purposes, the combined total of the subsidiary accounts (900 series) may be penciled in the ledger sheet established for this account. However, the subsidiary accounts should be closed into the control account only at year-end.


FCA

(2/18)

LEASE and RENTAL

LEASING

This Section of the Manual is intended for use by dealerships engaged in leasing and renting vehicles as a part of the dealership operation, and not as a separate company or corporation.

Provisions made in the Dealer Uniform Accounting System are designed for operations of a supplemental nature whereby the volume of units, revenue, and expenses do not require elaborate control. Dealerships engaged in this activity on a large scale should consider establishing a separate business, with an accounting system designed specifically for that type of activity. Regardless of the type of organization employed, it is recommended that outside legal, tax, and accounting advice be obtained.

This Section has been designed to control revenue and expenses related to DAILY RENTALS (including rentals to service customers), which are:

1. Hourly 2. Daily 3. Weekly 4. Six Months or less

and, the four basic types of LEASES, which are:

1. OPEN END Maintenance 2. OPEN END Non-Maintenance 3. CLOSED END Maintenance 4. CLOSED END Non-Maintenance

Lease and rental income should be recorded in the Vehicle Lease and Rental Income Summary, Form DUAS-499. All other daily lease and rental transactions should be handled through the regular journals. The Chart of Accounts is designed to accommodate all lease and rental transactions in the normal manner. In addition, provision is made in the following accounts for specific items related to the leasing activity:

Acct. No. Name

114 Other Receivables 116-G Factory Receivables - Other 145-F Prepaid Expenses: Other 156-A Lease/Rental Vehicles 156-B Depreciation and Program Allowances - Lease/Rental Vehicles 217-D Other Accrued Expenses: Miscellaneous

240 Security Deposits: Lease Vehicles 256 Lease/Rental Vehicle Liability

The income and expenses are controlled through the following Other Income and Other Deductions control accounts:

Acct. No. Name

615 Vehicle Lease and Rental Income 715 Vehicle Lease and Rental Expense

(2/18)


FCA 7-1

LEASE and RENTAL

LEASING

These two accounts control the income and expenses recorded in the subsidiary accounts provided in this Section. There are a total of 15 Subsidiary Accounts. They are:

Income:

Acct. No.

Name 803-8 Lease Income 807-8 Rental Income 809-8 Gain or (Loss) on (L & R) Vehicles

Expense: DIRECT

Acct. No. 920-8

Name Gasoline

922-8 Maintenance and Repairs 927-8 Licenses, Titles, and Taxes 928-8 Depreciation 929-8 Insurance 930-8

940-8

Interest SELLING Salaries, Wages, and Commissions

945-8 Company Cars 947-8 Pick-up and Delivery 949-8 Advertising and Promotion 951-8 Bad Debts 955-8 Miscellaneous

The combined total of the balances in the 800 Account Series should be reported as income (Account 615) on the monthly financial statement. For control purposes, the combined total may be penciled in the control account General Ledger Sheet. However, these subsidiary account balances should be closed into the control account only at year-end.

Likewise, the 900 Account Series combined total should be reported as expense (Account 715) and handled in the same manner outlined above.

The below listed forms have been designed specifically for use in this activity. (Refer to Section 9-Forms for additional information):

Form No. Name

DUAS-201-5C Financial Statement: Operating Information – Leasing and Rental

Dealerships engaged in leasing and renting vehicles under the FCA Dealer Rent-A-Car (D.R.A.C.) Program, Driver Education School Program, or similar programs, should use the accounts and forms outlined above for accounting uniformity and internal control.


FCA (2/18)

LEASING INCOME Account

LEASE INCOME 803-8


1. All revenue, received or accrued, from lease vehicles in accordance with contractual terms.

Procedure:

The balance in this account represents all revenue on vehicles when the lease term is in excess of six months. Revenue includes all income derived from the contractual agreement (Basic Income), plus any additional charges for mileage (Mileage Income).

It is recommended a Distribution Sheet be used to categorize the entries in this account into the four types of leases. This will facilitate preparation of the monthly financial statement.

The balance in this account should be combined with the balances in Accounts 807-8 and 809-8 to arrive at the total revenue. This combined total should be reported as "Vehicle Lease and Rental Income" (Account 615) on the monthly financial statement.

For control purposes, the combined total of the 800 Account Series may be penciled in the control account (A/C 615) each month. However, these account balances should be closed into the control account only at year-end.

Complete data, including income and expense, per contractual terms should be maintained on each vehicle leased.

(2/18)


FCA 7-3

LEASING INCOME Account

RENTAL INCOME 807-8


1. All revenue, received or accrued, from rental vehicles in accordance with contractual terms.

Procedure:

The balance in this account represents all revenue on vehicles when the rental term is: hourly, daily, weekly, or six months or less. This includes revenue from rentals to service customers (refer to Company Car Expense, Account 372). Revenue includes all income derived from the contractual agreement (Basic Income), plus additional charges for mileage (Mileage Income).

The balance in this account should be combined with the balances in Accounts 803-8 and 809-8 to arrive at the total revenue. This combined total should be reported as "Vehicle Lease and Rental Income" (Account 615) on the monthly financial statement.


Complete data, including all income and expenses, per contractual terms should be maintained on each vehicle rented.


FCA

(2/18)

LEASING INCOME Account 809-8

GAIN or (LOSS) ON (L&R) VEHICLES

DEBIT with:

1. Any loss resulting from the sales of lease and rental vehicles when removed from service.

2. Any amounts due to lessees under the terms the lease agreement.

CREDIT with:

1. Any gain derived from the sales of lease and rental vehicles when removed from service.

2. Any amounts due from lessees under the terms of the lease agreement.

Procedure:

The balance in this account represents the net gain or loss resulting from sales of all lease and rental vehicles.

When vehicles are removed from lease and rental service and transferred to the Used Car Department, this account should be charged with any excess book value over the appraised wholesale value.

It is recommended a Distribution Sheet be used to categorize the entries in this account into the four types of leases, and rental. This will facilitate preparation of the monthly financial statement.

The balance in this account should be combined with the balances in Accounts 803-8 and 807-8 to arrive at the total income. This combined total should be reported as "Vehicle Lease and Rental Income" (Account 615) on the monthly financial statement.


Complete data, including all income and expenses, per contractual terms should be maintained on each vehicle.

(2/18)


FCA 7-5

LEASING DIRECT EXPENSE Account

GASOLINE 920-8

DEBIT with:

1. The cost of gasoline purchases for lease and rental vehicles.

CREDIT with:

CAUTION: Gasoline used for staff and company cars, or cars returned from distant points, should not be charged to this account. (Refer to Accounts 945-8 and 947-8).

Procedure:

The balance in this account represents the cost of all gasoline used by leased and rented vehicles, including customer gas tickets (when rental rate includes gas).

Customer gas tickets that may include oil should be charged to this account in total, including the oil amount, inasmuch as these will be nominal amounts.

It is recommended a Distribution Sheet be used to categorize the charges in this account into the four types of leases, and rental. This will facilitate preparation of the monthly financial statement.

The balance in this account should be combined with the remaining 900 Series account balances to arrive at the total expense. This combined total should be reported as "Vehicle Lease and Rental Expense" (Account 715) on the monthly financial statement.


Complete data, including all expenses, per contractual terms should be maintained on each vehicle record.


FCA

(2/18)

LEASING DIRECT EXPENSE Account 922-8

MAINTENANCE AND REPAIRS

DEBIT with:

1. All maintenance and repair costs for lease and rental vehicles, whether in service or in stock.

CREDIT with:

1. Any reimbursements, or recovery, for specific items charged to this account.

Procedure:

The balance in this account includes all maintenance and repair costs directly related to lease and rental vehicles. This includes such items as:

Accident repairs (uninsured portion) Antifreeze Tires and tubes Batteries Oil and lubrications Etc. Chains

Oil purchased by customers and submitted for reimbursement on "gas tickets" should not be charged to this account. The total amount of the ticket, including oil, should be charged to Gasoline Expense, Account 920-8.





(2/18)


FCA 7-7

LEASING DIRECT EXPENSE Account 927-8

LICENSES, TITLES, AND TAXES

DEBIT with:

1. All charges for licenses and taxes directly related to lease and rental vehicles.

2. The cost of any unexpired license and tax expenses upon termination of a lease contract.

3. Any taxes levied on receipts derived from lease and rental vehicles.

CREDIT with:

Procedure:

The balance in this account represents the cost of all licenses, titles, and taxes specifically levied on lease and rental vehicles. These items are normally established as Prepaid Expenses and charged to this account on a monthly basis. Amortization of these prepayments should be made over the period benefited.






FCA

(2/18)


DEPRECIATION 928-8

DEBIT with:

1. The monthly charge for depreciation of lease and rental vehicles.

CREDIT with:

Procedure:

The balance in this account represents the accumulated depreciation expense applicable to all lease and rental vehicles in service.




The offsetting credit for this expense should be made to Depreciation and Program Allowances - Lease/Rental Vehicles, Account 156-B.

Complete data, including all expenses, per contractual terms, should be maintained on each vehicle record.

(2/18)


FCA 7-9


INSURANCE 929-8

DEBIT with:

1. The cost of premiums on lease and rental vehicles for insurance coverage for:

A. Public liability B. Property damage C. Collision D. Comprehensive fire and theft

CREDIT with:

Procedure:

The balance in this account represents the cost of all insurance premiums for coverage of lease and rental vehicles.

“Net Cost” means the cost of premiums less any refunds for short term cancellations.






FCA

(2/18)


INTEREST 930-8

DEBIT with:

1. The interest on funds borrowed to finance lease and rental vehicles.

CREDIT with:

Procedure:

The balance in this account represents the cost of all interest incurred for funds borrowed to finance lease and rental vehicles.





(2/18)


FCA 7-11

LEASING SELLING EXPENSE Account 940-8

SALARIES, WAGES, AND COMMISSIONS

DEBIT with:

1. The gross salaries, wages, and commissions paid to personnel engaged directly in the leasing operation.

2. The month-end accrual of salaries, wages, and commissions earned in the current period, payable in a subsequent period.

CREDIT with:

1. The reversal of the month-end accrual.

Procedure:

The balance in this account represents all salaries, wages, and commissions earned by personnel engaged directly in the leasing activities of the dealership.




FCA

(2/18)

LEASING SELLING EXPENSE Account

COMPANY CARS 945-8

DEBIT with:

1. The cost of operating and maintaining staff and company cars for the leasing operation's use.

CREDIT with:

Procedure:

The balance in this account represents the total cost of operating and maintaining company cars in service, solely for use by the leasing activity of the dealership; including the Lease Managers assigned car, courtesy cars, etc.


Gas, oil, and lubrication Washing and polishing License and title fees Sales and use taxes Safety inspections (vehicle stickers) Repairs (uninsured portion) Depreciation expense Any expense allowance to personnel for

use of their personal car on leasing business.



(2/18)


FCA 7-13


PICK-UP AND DELIVERY 947-8

DEBIT with:

1. The expenses incurred for picking up and delivering lease and rental vehicles.

CREDIT with:

Procedure:

The balance in this account represents the total cost for all pick-up and delivery of lease and rental vehicles, excluding compensation paid to personnel of the leasing activity. Bills for gas on cars returned from distant points, airline tickets for employee's returns, etc., should be included in this account.




FCA

(2/18)

LEASING SELLING EXPENSE Account 949-8

ADVERTISING AND PROMOTION

DEBIT with:

1. All expenditures for advertising and sales promotion directly related to the lease and rental activity.

CREDIT with:

Procedure:

The balance in this account represents the total cost of advertising and sales promotion for the express purpose of promoting lease and rental business.



(2/18)


FCA 7-15


BAD DEBTS 951-8

DEBIT with:

1. The month-end adjustment to increase the provision for doubtful leasing accounts receivable.

CREDIT with:

1. The month-end adjustment to decrease the provision for doubtful leasing accounts receivable.

CAUTION: Accounts written off as bad debts should be properly documented detailing the collection effort and the determination of uncollectibles.

Proper credit investigation and approval may minimize bad debt losses.

Procedure:

When leasing and rental accounts are collected by a credit and collection agency, the portion of the account that is retained by such agency should be charged to Miscellaneous Expense, Account 955-8. The total amount collected should be credited to the individual's account.




FCA

(2/18)


MISCELLANEOUS 955-8


1. Expenditures for which specific accounts have not been provided.

CAUTION: This account is for those miscellaneous expenses directly applicable to leasing and rental activities. It is

recommended that no attempt be made to prorate or distribute overhead expenses of the total dealership operation to this account.

Procedure:

Expenses charged to this account should be relatively few in number. However, the following expenses are directly applicable to the account:

All selling expenses not otherwise provided in the Chart of Accounts. For example, Leasing Training for all categories of Leasing and Rental personnel.

All items of an "overhead expense" category solely identified with the leasing activity, such as:

Travel and Entertainment Employee Benefits Insurance (Other) Taxes (Leasing business license, etc.) Interest (Other) Utilities Rent and equivalent Depreciation (other than L&R Vehicles) Maintenance & Repair (Other)

It is recommended that a Distribution Sheet be used to categorize the charges in this account. This will facilitate the preparation of audit reports and tax returns at the conclusion of the financial reporting period.



(2/18)


FCA 7-17

REPOSSESSION ACCOUNTING PROCEDURES INTRODUCTION

REPOSSESSED VEHICLE SURPLUS/DEFICIENCY This publication is a part of the uniform accounting system and accounting practices that are referred to in Paragraph 9 of the Direct Dealer Agreements in effect between FCA and dealers in its vehicles. By law, a dealer is required to refund to the defaulting customer any surplus remaining upon resale of a repossessed vehicle that has been returned to the dealer. The duty to pay surpluses is not new; it has existed for many years. He/She may also seek recovery for any deficiency. This publication (Section 8 of the FCA DUAS Manual) covers accounting procedures for determining surplus/deficiency amounts upon resale or lease of a repossessed vehicle. All documents used in connection with this procedure shall be retained in vehicle record folders that are clearly identified as repossession files and segregated in the dealer's records. A form entitled "Record of Repossessed Vehicle Sale" and designated DUAS 500 has been designed which will provide an end product for proper repossession accounting. When this form is prepared according to the DUAS procedural descriptions set forth herein, an accurate determination can be made of repossession surpluses and deficiencies. Each dealer must prepare a Record of Repossessed Vehicle Sale, Form DUAS 500, for each repossessed vehicle sold. Instructions on how to complete the form begin on page 8-4. The "Customer" copy of this form must be sent with any surplus payment to the person from whom the vehicle was repossessed; or to any defaulting customer from whom a deficiency is sought. The "Financial Institution" copy is to be forwarded to the customer's lending institution. The "Dealer" copy is to be retained by the dealer together with relevant underlying documentation for at least two years from the date of disposition of the vehicle. If the defaulting customer was a fleet purchaser, another dealer or a wholesaler, or used the vehicle in the lease or rental business, this procedure need not be followed. Each dealer must prepare a "Repurchased Vehicle Log" Form DUAS 501, which must include a record of all vehicle repossessions and subsequent resale. When calculating to determine any surplus or deficiency on the sale of a repossessed vehicle, a dealer may deduct from the proceeds of the sale only the actual out-of-pocket expenses incurred as a result of the repossession. These actual expenses are listed on the Record of Repossessed Vehicle Sale, Form DUAS 500, and are defined in this Section of the Dealer Uniform Accounting System Manual, beginning on page 8-5. Only the expenses listed on Form DUAS 500, Record of Repossessed Vehicle Sale, should be deducted. The Federal Trade Commission (FTC) regards it as unlawful to deduct expenses other than expenses incurred as a direct result of the repossessing, holding, preparing for sale and selling of the vehicle. Failure to adhere to the procedures set forth in this Section of the Manual may expose the dealer to legal action by the FTC or by consumers. The expenses listed on Form DUAS 500, if reasonable and directly resulting from the repossession, holding, preparing for sale and reselling of the repossessed vehicle and not otherwise reimbursed to the dealer or prohibited by law, may properly be charged against the proceeds of sale.

(2/18)


FCA 8-1


DISPOSITION PROCEDURES The law of each state requires that all aspects of the sale of a repossessed vehicle be commercially reasonable. In practice this means that the dealership is obliged to make the same efforts to obtain the best available price for a repossessed vehicle that the dealership would make for a comparable used vehicle. A dealer should apply the same standard in determining appropriate reconditioning and marketing measures, except that a warranty for a repossessed vehicle need not be offered as a part of the vehicle sale price even though such warranties are provided on other used vehicles.

Except in very limited circumstances, the dealer should not seek or obtain any waiver of a customer's surplus or redemption rights. The Federal Trade Commission regards it as unlawful for dealers to use waivers to attempt to defeat or extinguish customers' surplus or redemption rights. According to the FTC's ruling: (1) Such waivers may be obtained only in the precise manner and circumstances contemplated by Section 9-505 of the Uniform Commercial Code as incorporated into the applicable state law; (2) A waiver may not be sought unless the dealer intends in good faith to retain the collateral for its own use for the immediate future rather than to resell the collateral in the ordinary course of business; and (3) If a waiver is sought, the dealer shall not represent or imply to the defaulting customer that it thereby proposes to forego its right to a deficiency judgment unless it intends to seek such a judgment should the waiver not be given. Such abuse of waivers will expose the dealer to legal action by the FTC or by consumers. Each dealer may wish to consult its attorney about this matter.

A listing of repurchase financing repossessions returned to the dealer should be obtained periodically from each financing institution from which the dealer received such repossessions. These lists should be retained in a separate file and kept for at least two (2) and preferably three (3) years after resale or lease.

CERTIFICATION The Record of Repossessed Vehicle Sale, Form DUAS 500, should be reviewed and signed by a dealership official authorized to sign retail installment contracts on behalf of the dealership.

MAILING PROCEDURES The surplus-payment check and Form DUAS 500 should be sent by regular mail to the customer's last residence address known to either the dealer or the financing institution. Indicate on the envelope that it is to be forwarded or if there is no forwarding address that it is to be returned to the dealer. (The dealer need not, but may, send the check and form by certified mail. If the certified letter is returned undelivered, however, the dealer is to retain the receipt and resend the check and form by regular mail to the last residence address known.)

If the check is returned undelivered after the above regular mailing, the return envelope is to be retained and the check and the form are to be sent within fifteen (15) days to the most recent of the following known addresses: the last employment address known to either the dealer or the financing institution; the address provided by the military Iocator service (see pages 8-9 and 8-10); or the address of a co-signer, relative or other person through whom the customer may be reached. The cancelled check and the dealer's copy of the form shall constitute proof that the surplus was paid and the form was sent. If they are re-mailed this should also be reflected on the form. The dealer's copy of the form, check and returned envelope should be kept in the vehicle record file.


FCA

(2/18)


REDEMPTION In accordance with state law, the dealer should permit the customer to redeem the repossessed vehicle at any time prior to a binding agreement for its disposition, except as may otherwise be provided by the laws of the individual states. Each dealer may wish to consult its attorney about the law governing redemption in its state. REBATES The dealer should apply promptly to the insurance carrier or agent for premium rebates with respect to any insurance financed (for example: prepaid insurance premiums, or claims for collision or other damage covered by insurance). If any rebate is received by the dealer after completing the Record of Repossessed Vehicle Sale, Form DUAS 500, the surplus or deficiency calculated on that form must be recalculated and a new or amended form prepared. Copies of the checks or other evidence of payments should be placed in the vehicle record file. LATE REBATES AND CREDITS In the event an insurance rebate or credit is received after the surplus has been paid, a second check for this amount must be sent to the customer in the same manner as the surplus; if such a rebate is received after a prior computation indicated that there was no surplus, a second computation should be made and if a surplus results it should be paid. In either event, payment should be made within forty-five (45) days of disposition or within ten (10) days of receiving the rebate, whichever is later. DEFICIENCIES If line 9 of Form DUAS 500 shows a negative balance, the form need not be completed beyond that point unless the dealer decides to pursue collection of a deficiency. In that event, a Form DUAS 500 completed in accordance with this procedure should be sent to the customer. Each dealer may wish to consult his attorney to determine whether and in what instances, repossession deficiencies are collectible under state law. RECORD RETENTION The vehicle record folders for repossessions should be segregated and readily retrievable in the dealer's files. Each such folder should contain all underlying documentation for the entries made on the Form DUAS 500 (including a copy of the completed used car record card for any vehicle received in trade). All such files and the periodic listings of repurchase financing repossessions obtained from each financing source should be kept for at least two (2) and preferably three (3) years after disposition of the repossessed vehicle. FCA AUDIT PROGRAM By order of the Federal Trade Commission (FTC), FCA is required over a limited period of years to audit the records of several hundred dealers engaged in repurchase financing, to assure that dealers are following the provisions of this Section of the Manual. The dealers to be audited are to be randomly selected under a FTC procedure. FCA is required to submit reports of the audit program to the Federal Trade Commission. The reports will note, among other items, failure to determine the existence of surpluses, deduction of improper expenses (including profit or overhead), failure to credit rebates to which the customer is entitled, failure to remit the correct surplus within the time limits specified in this Section of the Manual, instances of seeking or obtaining waivers of customers' surplus rights, the pursuit of incorrectly calculated deficiencies, and disposition of repossessed vehicles in a manner different from other used cars. The Federal Trade Commission may take legal action against dealers believed to be violating the law with respect to the determination and payment of surpluses.

(2/18)


FCA 8-3

REPOSSESSION ACCOUNTING PROCEDURES ACCOUNTING and FORMS PREPARATION

ACCOUNTING INSTRUCTIONS The resale of a repossessed vehicle should be recorded in the same manner as any other used vehicle sale. In addition, any refund due the original customer should be recorded as a credit in Account 202, Customer Refunds- Payable. The offsetting debit entry should be to Account 478-E, Customer Repossession Refund.

PREPARATION OF THE "RECORD OF REPOSSESSED VEHICLE SALE" FORM DUAS 500: No expenses other than those listed on Line 10 through 21 should be deducted. The Federal Trade Commission regards it as unlawful to deduct expenses other than those incurred as a direct result of the repossessing, holding, preparing for sale and selling of the vehicle.

Line 1 Resale Price of Vehicle

The price to be entered on this line is the price at which the vehicle was sold or leased to an independent third party. In determining the selling price, the dealer may not use sales in which the purchaser is the dealer, the financing institution or the representative of either. An estimated "actual cash value" may not be used in place of the actual selling price. (If the disposition is by lease rather than sale, the selling price is the high retail book value of the vehicle as established in a recognized guidebook current at the time of that disposition by lease. The relevant portion of the guidebook used in determining the high book value of a leased vehicle should be photocopied and placed in the vehicle record file.) In determining the selling price, the dealer should exclude the amount charged the purchaser for any separately priced warranty or service contract. This exclusion only applies when the charge for the separately priced warranty or service contract is reflected in the sale documents made available to the purchaser. Do not include taxes and license fees, nor amounts for financing and insurance.

Line 2 Overallowance on Trade-In

Enter on this line the amount allowed in excess of the actual appraised value of any trade-in received upon disposition of the repossessed vehicle. This appraised value must be supported by an appraisal consistent with the Dealer's method of appraising used vehicles. When computing the surplus on a repossessed vehicle, the adjustment for overallowance may not exceed the trade-in allowance given at the time the trade-in vehicle was received, less the wholesale value for the trade-in vehicle as determined by reference to a current recognized guidebook. The relevant portion of the guidebook used in determining the value of the trade-in should be photocopied and placed in the vehicle record file.

An adjustment for overallowance on a vehicle received in trade may be made only if that is the normal practice of the dealership and if it is not prohibited by law.

Line 3 Underallowance on Trade-In

Enter on this line the amount of the difference between the amount allowed and the actual appraised value of the trade-in.

An adjustment for underallowance on a vehicle received in trade may be made if that is the normal practice of the dealership and it is not prohibited by law.

Line 4 Adjusted Selling Price (A)

Line 1 minus Line 2, or Line 1 plus Line 3, establishes an Adjusted Selling Price.


FCA

(2/18)

REPOSSESSION ACCOUNTING PROCEDURES ACCOUNTING AND FORMS PREPARATION

Line 5 Pay-Off to Financing Institution

Enter the amount the dealer pays to satisfy his recourse obligation with the finance company or institution. It should always reflect deductions of unearned finance charges and the amount of unexpended premiums for credit insurance financed by that financial institution.

Line 6 Insurance Premium and Service Contract Rebates

Enter the amount of any unearned portion of the gross insurance premium and service contract charges (including portions identified as dealer commission), unless already reflected as a reduction in the payoff amount, Line 5, with respect to any credit life/disability or accident insurance or other prepaid coverage for which the dealer was the agent or which is received by the dealer from the insurance company or agent.

Line 7 Collision Insurance Payment(s)

Enter the amount of all sums received for collision insurance claim payments, unless already reflected as a reduction in the pay-off amount, Line 5. However, if an insurance payment is received and the corresponding vehicle damage is repaired, no deduction for such payment should be made.

The dealer should promptly submit appropriate claims for collision or other damage covered by insurance. Copies of the checks or other evidence of insurance payment should be placed in the vehicle record file.

Line 8 Pay-Off Adjusted for Rebates (B)

Pay-off to the Financing Institution (Line 5) minus Insurance and Service Contract Premium Rebates (Line 6) minus Collision Insurance Payment(s) (Line 7) equals the Pay-Off Adjusted for Rebates (Line 8).

Line 9 Surplus/Deficiency before "Allowable Expenses." (A)-(B)=(C)

If the Pay-Off Adjusted for Rebates exceeds the Adjusted Selling Price at this point in the calculation, a negative, or deficiency, will appear on this line. No further calculation is required on deficiencies, except where the deficiency is sought. Check the "Deficiency" column in the Repurchased Vehicle Log.

As to "ALLOWABLE EXPENSES" (Lines 10 through 21): only reasonable expenses directly resulting from the repossessing, holding, preparing for disposition and disposing of the repossessed vehicle may be deducted. For example, fixed costs, overhead, profit on the resale of the vehicle and financing or insurance income lost as a result of the repossession should not be deducted as expenses.

Line 10 Repair/Reconditioning – By Dealer

Enter on this line the cost of labor and associated parts furnished by the dealership for the repair, reconditioning, or maintenance of the vehicle in preparation for disposition. All of these items are to be computed at the dealer's cost and must be supported by information contained in the dealer's books and records.

(2/18)


FCA 8-5

REPOSSESSION ACCOUNTING PROCEDURES ACCOUNTING and FORMS PREPARATION – Cont’d.

Post-sale reconditioning and repairs should be charged only when specifically required in writing in the vehicle sales agreement and performed within forty-five (45) days of the date of sale, but parts and labor provided under a warranty or service contract should not be charged to the vehicle.

Labor and associated parts and supplies furnished by the dealer for the repair, reconditioning or maintenance of the vehicle in preparation for resale, including legally required inspections, should be computed at the following cost rates:

i. The hourly rate for mechanical technicians employed in the retail repair shop (for mechanical work)

o r for body-paint technicians employed in the retail body shop (for body work) should be either (a) the sum of the average hourly base rate for that category of technicians (mechanical or body-paint) plus 20 percent of that average hourly base rate for fringe benefits, or (b) the sum of the average hourly base rate for that category of technicians plus the average fringe cost per hour for that category of technicians as computed for the Dealer Warranty Labor Rate Election and Request Form (form number "84-133-6910" dated 2/79). (Payroll or other records used in these calculations should be retained in the dealer's vehicle record file.)

ii. The cost rate for labor for other reconditioning, clean-up and preparation work should be based on

actual time spent on the vehicle and should be computed at the base hourly wage rate for the employees involved plus 20 percent of the base hourly wage rate for fringe benefits. (Payroll or other records used in this calculation should be retained in the vehicle record file.)

iii. The cost rate for parts should be based on the dealer's cost for the parts used as listed in the current

manufacturer's catalogue.

If the payoff amount has been adjusted for warranty work or an insurance payment for collision damage, or if any payment has been received for collision damage or warranty work, then no deduction should be made for the corresponding vehicle work performed. (Note that if adjustments were made to the payoff amount for uninsured collision damage, a deduction should be made for the corresponding vehicle work performed.)

Line 11 Repair/Reconditioning–Sublet

Enter on this line the actual amounts paid to others for labor and associated parts and supplies purchased for the repair, reconditioning, or maintenance of the vehicle in preparation for disposition.

Line 12 Storage

Enter on this line the actual amounts paid to others for storage (excluding any charge for storage at facilities operated by the dealer) after repossession and prior to resale. It is only an allowable expense if the dealer's books and records verify a specific storage expenditure for the particular vehicle rather than an assignment of a certain percentage of overhead.

Line 13 Advertising–Direct

Enter on this line expenses of advertisements that specifically mention the particular vehicle. A proportional share of the expense of any advertisement specifically mentioning the vehicle that also mentions other vehicles may be included but should be strictly limited to only a legitimate proportional share of such expense.


FCA

(2/18)


Line 14 Salesperson Commissions

Enter on this line sales commissions paid for actual participation in the disposition of the particular vehicle, computed at a rate no higher than for a similar non-repossessed vehicle. Exclude portions of commissions attributable to the selling of service contracts, separately priced warranties, financing or insurance. Voluntary and legislated fringe benefits incurred as a direct result of payment of the commission may be included, such as FICA and federal and state unemployment taxes determined on the basis of the amount of commissions paid. Do not include fringe benefits which are not determined on the basis of commissions paid, such as the use of demonstrator vehicles, medical insurance, etc.

Line 15 Auction Fees/Expenses

Enter on this line amounts paid to others as auctioneer expenses and fees, and for transporting the vehicle to auctions.

Line 16 Dealer Repossession Expense

Enter on this line expenses paid to others, who are not employees of the dealership or of the financing institution that financed the vehicle, for repossessing, towing or transporting the vehicle.

Line 17 Legal Costs

Enter on this line filing fees, court costs, cost of bonds, fees and expenses paid to a sheriff or similar officer, and fees and expenses paid to an attorney who is not an employee of the dealership or the financing institution, for obtaining possession of or title to the vehicle.

Line 18 Title & Registration Fees

Enter on this line fees paid to others to obtain title to the vehicle, to obtain legally required inspection of the vehicle, or to register the vehicle.

Line 19 Postage/Telephone/Photocopying

Enter on this line expenses for communication (including telephone calls and postage) and photocopying necessarily incurred in arranging for the repossession, holding, transportation, reconditioning and disposition of the vehicle.

Line 20 Insurance Expense

(NOTE: the dealer may choose to ignore Line 20 because of the complexity of calculation and the small amount involved.) Enter on this line premiums paid specifically for insurance of the repossessed vehicle while in the dealer's possession. Where the insurance invoice does not separately identify the portion of premium attributable to that vehicle, the dealer should ascertain the amount (if any) by which the premium was increased because the particular vehicle was in inventory. For example, under some insurance arrangements the premium is based on actual inventory data at specified intervals. Assume that the dealer pays for such insurance at the rate of $2 per month per $1000 of inventory value, with the inventory reported at the end of each month, and that the repossessed vehicle has an inventory value of $2,000 and is in inventory at month's end. The dealer's allowable out-of-pocket insurance cost for that vehicle would be $4 ($2,000 [inventory value] x 1 [number of months] x $2/$1,000 [monthly premium per dollar inventory value] = $4). If the repossession were involved in two (or three) such premium-determining inventories, the amount allowable would be twice (or three times) as much, etc. If a figure is entered on Line 20, the vehicle record file must include copies of the relevant premium invoice(s) and of the insurance company or agent's letter or other statement indicating the cost basis upon which the calculation was made.

(2/18)


FCA 8-7


Line 21 Reimbursement to Financing Institution for Repossession Expenses

Enter on this line any expenses of the finance company or institution (e.g., repossession expenses or allowances for uninsured collision damage) that were not included in the payoff and were actually reimbursed by the dealership to the financial institution.

Line 22 Total Allowable Expenses (D)

Determine the sum of Lines 10 through 21 and record the total on this line.

Line 23 Subordinate Security Interests (E) Enter on this line the amount applied by the dealer in satisfaction of any subordinate security interest(s) provided for by law, involving the repossessed vehicle. To be allowable as a deduction, (1) the security interest must be reflected on a written instrument signed by the customer and describing the vehicle, and (2) a written demand and reasonable proof of the security interest must be furnished to the dealer no later than 45 days after disposition.

Line 24 Total Allowed Deductions (D)+(E)=(F)

Total Allowable Expenses plus Subordinate Security Interests equals the Total Allowed Deductions.

Surplus/Deficiency Before Allowable Expenses (C) Enter amount from Line 9 above.

Total Allowed Deductions (F) Enter amount from Line 24 above.

Line 25 Surplus/Deficiency (G)

From the above two lines, subtract (F) from (C). A DEFICIENCY will exist when a negative figure appears on this line. On the other hand, a SURPLUS will exist when a plus, or positive, figure appears on this line.

Each of the above entries should be made on the appropriate line and should be supported by books and records which demonstrate that it relates directly to the particular vehicle. All supporting documents should be retained in the vehicle record file.

The Surplus check (for Line 25) must be sent to the defaulting customer, accompanied by a copy of Form DUAS 500, within forty-five (45) days of the date of execution of a binding retail installment contract, the dealer's transfer of title to the vehicle, or the delivery of the vehicle to the purchaser, whichever is earliest. Strict adherence to this time limit is important. See also "Mailing Procedures" on page 8-2 above.


FCA

(2/18)

REPOSSESSION ACCOUNTING PROCEDURES MILITARY PERSONNEL LOCATOR SERVICE

The following is a listing of whom to contact to obtain the current duty station and address of military personnel. This listing is to be used in conjunction with the suggested letter on page 8-10.

Branch of Service U. S. Army

Address

U. S. Army Records

Fee

$2 Payable to & Evaluation Center

Attn. PCRE-RF-L Ft. Benjamin Harrison, Indiana 46249

Treasurer of the United States

U. S. Air Force U. S. Air Force Military Personnel Center DRM-2 Randolph AFB, TX 78148

$2 Payable to Treasurer of the United States

U. S. Navy Department of the Navy Bureau of Naval Personnel Washington, D.C. 20370

$2.40 Payable to Bureau of Naval Personnel

U. S. Marines Commandant - U. S. Marine Corps Hdqrs. Marine Corps - DGK-7 Washington, D.C. 20380

$2 Payable U. S. Marine Corp

U. S. Coast Guard Commandant - U.S.C.G. PE3-400 - 7th St., S.W. Washington, D.C. 20590

$3 Payable to U. S. Coast Guard

(2/18)


FCA 8-9

REPOSSESSION ACCOUNTING PROCEDURES MILITARY PERSONNEL LOCATOR INQUIRY

(Addressee) (See previous page)

Re: (Complete Customer Name) (Social Security No.) and/or (Service No.) (Rank if Known) (Age or Birth Date if Known)

Dear Sir: We are endeavoring to communicate with (customer name) in order to pay this customer some money.

Please advise of the latest duty station and/or address where we may correspond. Our check in the amount of $ is enclosed for your handling fee.

A stamped self-addressed envelope is enclosed for your reply.

Sincerely,

(Name) (Title)


FCA

(2/18)

REPOSSESSION ACCOUNTING PROCEDURES EXHIBIT 1 – FORM DUAS 500

(2/18)


FCA 8-11

DUAS FORMS FORMS INDEX

DUAS

Numerical and Type of Form

Description

Page Form No.

SOURCE DOCUMENTS No.

101 Cash Receipt 9-5 103 Vehicle Invoice 9-6 105 Repair Order – Customer 9-7 107 Repair Order – Internal 9-9 109 Parts Counter Invoice 9-10 123 Petty Cash Voucher 9-11 126 Purchaser Order 9-12 136 Salesman’s Daily Compensation Record 9-13

JOURNALS 141 Cash Receipts Journal 9-14 145 Cash Disbursements and Purchase Journal 9-16 149 New Vehicle Purchase Journal 9-19 153 New Vehicle Department - Sales Journal 9-21 157 Used Vehicle Department - Sales Journal 9-23 161 Service and Parts Journal - Repair Order Sales 9-25 165 Parts and Accessories Journal - Counter Sales 9-27 169 Warranty Sales Journal and Claims Register 9-28 173 Internal Sales Journal 9-31 177 Payroll Journal 9-34 181 General Journal 9-36 185 Standard Entries Journal 9-37

GENERAL LEDGER 191 Balance Sheet 9-39 194 Sales and Cost of Sales Sheet 9-40 197 Expense Ledger Sheet 9-41

FINANCIAL STATEMENT CHY-2287-1 Balance Sheet See Section 10 CHY-2287-2 Statement of Income and Expense See Section 10 CHY-2287-3 Departmental Gross Profit Analysis See Section 10 CHY-2287-4 Departmental Gross Profit Analysis See Section 10 CHY-2287-5 Departmental Gross Profit Analysis See Section 10 CHY-2287-6 Departmental Profit/Loss with Fixed Expense Allocation See Section 10 CHY-2287-7C Operating Information Lease and Rental See Section 10 DUAS-201-5 Operating Information – Leasing and Rental See Section 10 DUAS-201-6 Departmental Operating Summary See Section 10 DUAS-201-7 Lease See Section 14

WORKSHEET - FINANCIAL STATEMENT 201-1WS Balance Sheet See Section 10 201-2WS Statement of Income and Expense See Section 10 201-3WS Departmental Gross Profit Analysis See Section 10 201-4WS Departmental Gross Profit Analysis See Section 10 201-5WS Departmental Gross Profit Analysis See Section 10 201-6WS Departmental Profit/Loss with Fixed Expense Allocation See Section 10

(2/18)


FCA 9-1

DUAS FORMS FORMS INDEX (Cont’d)

Numerical and Type of Form

DUAS De Form No.

SUBSIDIARY LEDGERS and DOCU

scription Page No.

MENTS 300 Subsidiary Ledger Sheets 9-42 305-1 New Vehicle Inventory Record 9-43 305-2 Used Vehicle Inventory Record 9-44 305-3 New and Used Vehicle Inventory and Sales Record 9-45 325 Accounts Payable Voucher Envelope 9-46 331 Petty Cash Summary Envelope 9-47 337 Daily Summary - Repair Order Sales and Counter Sales 9-48 355 Prepaid and Accrued Accounts Schedule 9-49 367 Fixed Asset Inventory and Depreciation Record 9-50 373 Monthly Analysis Summary 9-51 379 Bank Reconciliation 9-52

SUNDRY FORMS 453 Used Vehicle Appraisal

9-53

500 Record of Repossessed Vehicle Sale See Section 8


FCA

(2/18)

DUAS FORMS FORMS INDEX

Alphabetical

Description

Page No.

Accounts Payable Voucher Envelope (DUAS-325) 9-46 Balance Sheet – General Ledger (DUAS-191) 9-39 Bank Reconciliation (DUAS-379) 9-52 Cash Disbursements and Purchase Journal (DUAS-145) 9-16 Cash Receipt (DUAS-101) 9-5 Cash Receipts Journal (DUAS-141) 9-14 Daily Summary – Repair Order Sales and Counter Sales (DUAS-337) 9-48 Expense Sheet – General Ledger (DUAS-197) Financial Statement (DUAS 201 & 201 WS) Fixed Asset Inventory and Depreciation Record (DUAS 367)

9-41 See Section 10

9-50 General Journal (DUAS-181) 9-36 Internal Sales Journal (DUAS-173) 9-31 Monthly Analysis Summary (DUAS-373) 9-51 New and Used Vehicle Inventory and Sales Record (DUAS-305-3) 9-45 New Vehicle Department – Sales Journal (DUAS-153) 9-21 New Vehicle Inventory Record (DUAS-305-1) 9-43 New Vehicle Purchase Journal (DUAS-149) 9-19 Parts and Accessories Journal – Counter Sales (DUAS-165) 9-27 Parts Counter Invoice (DUAS-109) 9-10 Payroll Journal (DUAS-177) 9-34 Petty Cash Summary Envelope (DUAS-331) 9-47 Petty Cash Voucher (DUAS-123) 9-11 Prepaid and Accrued Accounts Schedule (DUAS-355) 9-49 Purchase Order (DUAS-126) 9-12

(2/18)


FCA 9-3

DUAS FORMS FORMS INDEX (Cont’d)

Alphabetical

Description

Page No.

Record of Repossessed Vehicle Sale (DUAS-500) Repair Order – Customer (DUAS-105)

See Section 8 9-7

Repair Order – Internal (DUAS-107) 9-9 Sales and Cost of Sales Sheet – General Ledger (DUAS-194) 9-40 Salesman’s Daily Compensation Record (DUAS-136) 9-13 Service and Parts Journal – Repair Order Sales (DUAS-161) 9-25 Standard Entries Journal (DUAS-185) 9-37 Subsidiary Ledger Sheet (DUAS-300) 9-42 Used Vehicle Appraisal (DUAS 453) 9-53 Used Vehicle Department – Sales Journal (DUAS-157) 9-23 Used Vehicle Inventory Record (DUAS-305-2) 9-44 Vehicle Invoice (DUAS-103) 9-6 Warranty Sales Journal and Claims Register (DUAS-169) 9-28


FCA (2/18)

DUAS FORMS DUAS-101

CASH RECEIPT

This form is provided to record, and account for, all monies received by the dealership. Each form should be accurately completed in full so as to insure proper accountability for monies received by the dealership.

The forms are pre-numbered in coil-bound books with 100 triplicate sets per book. Space is provided for imprinting the dealership name. The office copy of this form is extended and has been preprinted with the account names and numbers generally applicable to receiving cash. Additional lines are also provided for accounts which may be debited or credited at the time monies are received by the dealership.

This form can be used for recording transactions by hand, bookkeeping machine, or electronic accounting. The internal copies of this form have special columns captioned “KEY” and a block captioned “CUSTOMER NUMBER.” These columns and blocks are used by those dealerships having electronic accounting.

(2/18)


FCA 9-5

DUAS FORMS DUAS-103

VEHICLE INVOICE

This form is provided to record any sale made by the New or Used Vehicle Departments. Invoices are in triplicate and pre-numbered consecutively; every number should be accounted for numerically. All copies of spoiled invoices should be marked “void” and filed with other invoices in numerical order.

Complete statistical information regarding the purchaser, type of vehicle, settlement, etc., should be shown on each invoice. The office copy of this form has been preprinted with the basic account names and numbers generally required to record transactions applicable to the form. Additional lines are also provided for accounts which may be debited or credited at the time of the transaction. Certain preprinted account numbers have one or two digits omitted, with a heavy underline below the omission. It will be necessary to insert the applicable numbers in these blank spaces at the time the invoice is prepared in order to complete the account number. These numbers should have the appropriate account name inserted in the related description column to the left.

This form can be used for recording transactions by hand, bookkeeping machine, or electronic accounting. The internal copies of this form have special columns captioned “KEY” and a block captioned “CUSTOMER NUMBER.” These columns and blocks are used by those dealerships having electronic accounting.


FCA (2/18)

DUAS FORMS DUAS-105

CUSTOMER REPAIR ORDER

The Customer Repair Order is provided as a means of recording the sales and costs of labor, parts, and other material handled by the Service Department. This includes both mechanical and body and paint operations. The Service Manager, Service Salesman, Shop Foreman, or any other person in charge of service and repairs should prepare this order when the customer brings in the job. Provision is made on this form for recording all the pertinent facts related to the customer and the vehicle. To minimize writing of detail instructions and as a service reminder and sales aid, provision is also made for imprinting ten service operations. Detailed instructions covering other repairs requested by the customer should be written in the "Instructions" space, and the customer should sign in the space indicated so that there will be no misunderstanding as to the nature of the work which is to be done. The form is to be used for all service and repair work for which a customer or a service contract plan will be billed. It may also include policy work not charged to the customer; however, this usage should be restricted to policy work related with paid work. (A separate Internal Repair Order, DUAS-107, is provided for internal and policy work.) In the event the customer requires work covered by the factory warranty, such work should be recorded on the warranty repair order. The charge to the customer may consist of several component parts such as labor, parts, accessories, outside work, etc. An explanation of the handling of these various charges is as follows:

LABOR Labor charges on customer repair orders may be in various forms, namely, on a flat rate or an hourly basis. If the charge is on a flat-rate basis, the operation number is indicated, and the operation price is shown in the Labor column. If the work to be done is on an hourly basis, the number of hours spent on the job is determined from the back of the hard copy to which the gummed sections of the Daily Time and Job Ticket have been affixed. (See explanation of Daily Time and Job Ticket, Form DUAS-139.) Before the charges on the repair order are closed, a careful check should be made to assure that all productive time and labor charges have been properly recorded. MATERIAL The mechanic should present the hard copy of the repair order to the Parts Department, which should have the remaining copies of the repair order. The parts, etc., withdrawn from stock, sales price, and cost should then be entered on all copies of the repair order. SUBLET WORK When outside work is required to complete a repair order, Purchase Order, Form DUAS-126, should be prepared and the number of the repair order to which the work applies clearly indicated thereon. A copy of this purchase order should be attached to the repair order to assure charge to the customer for such work and internal check on cost of sales. (See explanation of Purchase Order, Form DUAS-126.)

When the authorized work on the repair order is completed, the hard copy of the repair order should be sent to the service cashier and all items checked against or posted to the original and duplicate copies. The totals of all labor, parts, etc., columns should be entered in the space provided to determine total charge to the customer. Prompt posting and billing of completed repair orders will expedite delivery of the car to the customer.

The internal copies of this form have been preprinted with the basic account names and numbers generally required to record transactions applicable to the form. Additional lines are also provided for accounts which may be debited or credited at the time of the transaction. Certain preprinted account numbers have one or two digits omitted, with a heavy underline below the omission. It will be necessary to insert the applicable numbers in these blank spaces at the time the form is prepared. The applicable numbers are referenced in the related description column to the left. Distribution of copies is indicated on the tear-off tab of the form.

(2/18)


FCA 9-7

DUAS FORMS DUAS-105

CUSTOMER REPAIR ORDER – Cont’d.

This form can be used for recording transactions by hand, bookkeeping machine, or electronic accounting. The internal copies of this form have special columns captioned "KEY" and a block captioned "CUSTOMER NUMBER." These columns and blocks are used by those dealerships having electronic accounting.


FCA (2/18)

DUAS FORMS DUAS-107

INTERNAL REPAIR ORDER

The Internal Repair Order is provided to record any work performed by the Service Department for other departments within the dealership, such as New Vehicle Pre-Delivery, Used Vehicle Reconditioning, etc.

Work performed for other departments should be authorized by the respective department managers. Completed repair orders, showing the total charge for the work performed, should also be approved by the department manager before being recorded.

The accounting section has been separated into three areas: subsidiary record; sales and cost of sales; and distribution or "charge to" area. These areas have been preprinted with the basic account names and numbers generally required to record transactions applicable to the form. Additional lines are also provided for accounts which may be debited or credited at the time of the transaction. Like other source documents, certain preprinted account numbers are multi-purpose and must be completed by adding one or two digits.


(2/18)


FCA 9-9

DUAS FORMS DUAS-109

PARTS COUNTER INVOICE

This form is designated for use in conjunction with all Parts Department "over-the-counter" sales. It is also used for internal sales, which should be identified as such. (Caution: This form should not be used as a substitute for Repair Orders.) Each form should be accurate and complete in all details of the transaction because it is a means of accounting for cash or credit.

To insure proper control, only the Parts Department Manager (or other authorized personnel) should issue this document. When used as a credit for merchandise returned by a customer, it should be boldly marked to identify it as such, and approved by the Parts Manager.

These forms are pre-numbered to provide proper control. If, for any reason, these forms are "voided":

1. Form should be initialed by individual authorized to verify such voided forms. 2. All copies of voided forms should be sent to the office.

The form is supplied in triplicate. The distribution of copies is provided at the bottom of the form.

After the office copy has been costed by the Parts Department, it is furnished to the office for use as the source document of original entry to either the "Parts and Accessories Journal – Counter Sales," or the "Internal Sales Journal," whichever is applicable.


FCA (2/18)

DUAS FORMS DUAS-109 DUAS-123

PARTS COUNTER INVOICE – Cont’d.

The office copy of this form has been preprinted with the basic account names and numbers generally required to record transactions applicable to the form. Additional lines are also provided for accounts which may be debited or credited at the time of the transaction.


PETTY CASH VOUCHER DUAS-123

A voucher should be prepared by the custodian for each item of cash expended from the Petty Cash Fund. Each voucher serves as a receipt when signed by the recipient of the monies. An authorized person should approve all vouchers in the space provided.

These forms are pre-numbered to provide proper control. If, for any reason, a form is voided:

1. Form should be initialed by individual authorized to verify such voided forms. 2. The voided form should be retained by the office.

When the voucher is issued, the suppliers invoice should be securely attached. Space is provided on the left side of the voucher for accounting distribution of the monies shown.

The voucher should be held in the Petty Cash Fund until the Fund is reimbursed by check, at which time the voucher should be filed in the Petty Cash Summary Envelope, DUAS-331.

(2/18)


FCA 9-11

DUAS FORMS DUAS-126

PURCHASE ORDER

The purpose of this form is to provide proper control of purchase commitments. It is prepared by authorized personnel only, and should be used for all purchases other than new and used vehicles and parts from FCA.

The Purchase Order is provided in triplicate sets in coil-bound books, detailing each purchase and giving shipping directions and terms and conditions under which purchase is made.

As an aid to proper accounting, space has been provided in the lower left hand corner of this form for "Job Number" and "Account." The repair order number, parts counter invoice number, or stock number, as well as the number(s) of the account(s) to be charged should be entered on the lines provided.

The original goes to the vendor. The duplicate copy goes to an "open purchase order" file awaiting the vendor's invoice. The triplicate, or office copy, remains on file in the book.

When the order is filled and goods received, the necessary notations as to receipt of goods, etc., are made on this form. The receiving slip and vendor's shipping order are attached, and the copy turned in to the office. When partial shipments are made, the vendor's shipping order, properly cross-referenced, may be used as a means of reporting receipts.


FCA (2/18)

DUAS FORMS DUAS-136

SALESMEN’S DAILY COMPENSATION RECORD

This form is provided to accumulate (for each pay period) the earnings of each salesman whether on a commission or salary-and-commission basis. Provision is made to record the payments made to each salesman and the balance owed to, or due from, the salesman.

This form should be prepared in duplicate so that a copy may be furnished to each salesman at the end of the pay period. Each sale should be recorded separately, showing the invoice number, customer's name, and whether the vehicle sold was new or used.

The amount of each vehicle sale may be entered in the "Sales" column, and the adjacent blank columns used to record separate sales classifications subject to variance in compensation, trade-ins, or deductions from sales, etc. The total sale – or if desired, the net sale – subject to commissions may be entered in the "Total" column.

The "Credits" columns are provided to record the amount of salesman's earnings for the period in accordance with the basis of compensation. At the end of the pay period this form will be totaled and will support the entries made on the Payroll Journal, Form DUAS-177.

The check numbers and gross amount (before deductions) of each of the checks issued to the salesman should be entered in the "Debits" columns. The "Balance" column represents the cumulative difference between the Credits and Debits columns.

(2/18)


FCA 9-13

DUAS FORMS DUAS-141

CASH RECEIPTS JOURNAL

All cash, checks, etc., received from every source should be recorded on this journal.

Provision has been made in this journal to record the day, cash receipt number, and source from which cash was received. The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. Additional blank columns are also provided for repetitive transactions (to one account), so as to reduce the summarization in the "General" column. The amount columns should be used as follows:

General

DEBITS SIDE

This column should be used to record debits to accounts other than those for which debit columns have been provided.

The account numbers should be inserted on the same line as the amount in the space provided to the left. The amounts should be summarized, by account number, at the end of the month and posted as debits to the various accounts and subsidiary records.

Blank Column (Debit) This amount column should be used for repetitive one-account-transactions to reduce summarization in the "General" column.

Cash Discounts Allowed This column should be used to record cash discounts allowed customers for payment of their accounts within a specified time.

Undeposited Cash This column should be used to record the actual amount of cash, checks, etc., received. (The amount determined from this column as the daily deposit should be recorded in the "Bank – Deposits" column of the Cash Disbursement and Purchase Journal, Form DUAS-145.)

Contracts in Transit

CREDITS SIDE

This column should be used to record amounts received from finance institutions in payment of accepted customer finance contracts.

Receivables The "Check Off" column provided in this section should be used for the Contracts in Transit column as well as the various Receivables in this section.

Receivables – Service & Parts Accounts This column should be used to record the gross amounts (before any allowed deductions) received in payment of customer accounts receivable. The amounts recorded in this column should be credited daily to the individual accounts in the subsidiary ledger.

Receivables – Vehicle Accounts This column should be used to record the gross amounts received in payment of vehicle accounts receivable. The amounts recorded in this column should be credited daily to the individual accounts in the subsidiary ledger.


FCA (2/18)

DUAS FORMS DUAS-141

CASH RECEIPTS JOURNAL – Cont’d.

Receivables – Customer Notes This column should be used to record the gross amounts received in payment of notes receivable. The amounts in this column should be credited daily to the individual accounts in the subsidiary ledger.

Receivables – Factory This column should be used to record all checks received from the factory for the following accounts: Warranty Service Claims, Holdback, Special Vehicle Income, Floor Plan Allowance, Wholesale Compensation, Inventory Rebates, or Other factory receivables.

The applicable account suffix letters should be inserted next to the amounts in the space provided. These amounts should be summarized by suffix letter, and posted to the various accounts and subsidiary records.

Cash Sales This column is used to record:

1. The "Cash Sales" representing the total daily receipts (which may be entered as one amount) of the Cash Sales Columns in the Service and Parts Journal – Repair Order Sales (DUAS-161); the Parts and Accessories Journal – Counter Sales (DUAS-165); or the Daily Summary (DUAS-337).

2. All other cash receipts individually.

The check off column provided for this column should be used in conjunction with the check off columns provided by the Cash Sales columns in the various journals to verify the actual cash receipt with the appropriate cash sales amount.

Due from Finance and Insurance Companies – Current This column should be used to record amounts received in settlement of finance reserve income and insurance commissions.

Blank Columns (Credit) These amount columns should be used for repetitive one-account-transactions to reduce the summarization of the "General" column.

General This column should be used to record credits to accounts other than those for which credit columns have been provided.

The account numbers should be inserted on the same line as the amount in the space provided to the left. The amounts should be summarized, by account number, and posted as credits to the appropriate accounts and subsidiary records, at month-end.

(2/18)


FCA 9-15

DUAS FORMS DUAS-145

CASH DISBURSEMENTS AND PURCHASE JOURNAL

All checks issued and purchases made (except new vehicle purchases) should be recorded in this journal.

All disbursements, except those made from the petty cash fund, should be made by check voucher. Check vouchers should be numbered consecutively, recorded in sequence, and all numbers accounted for. If a check voucher is voided, it should be listed in this journal and filed with the checks returned from the bank in order to maintain numerical sequence.

With the Accounts Payable Voucher Envelope system, the various invoices from each creditor and the accounting distribution are entered on the voucher envelope during the month, so that at the end of the month each voucher envelope will contain all invoices from the creditor for that month. The total amount of the voucher envelope and accounting distribution should then be entered on this journal in one entry.

Each purchase invoice may be recorded individually, if desired, in which case a subsidiary Accounts Payable Ledger should be maintained and all items in the Accounts Payable columns posted in detail to the respective creditors' accounts.

Regardless of the system used, invoices covering purchases should be approved as to authorization of purchase, receipt of merchandise, price, extension, etc., before being recorded.

Provision is made on this form for recording the date, reference, and payee or creditor's name. The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. The amount columns should be used as follows:

BANK

Date Enter date of deposits for the amounts recorded in column to right.

Deposits This column should be used to record each deposit made in the bank. Deposits should be made daily, and amounts should be in agreement with the footing of cash receipts for the day as shown in the Cash Receipts Journal, Form DUAS-141.

Memo Balance This is a memo column only. The previous month-end balance of Cash in Bank (A/C 103) should be "Brought Forward" to this column at the beginning of the month. During the course of the month, the amount of deposits should be added to this balance, and the amount of checks issued should be deducted to determine the bank balance.

CREDITS SIDE

Checks Drawn The exact amount and check number of each check issued is entered in the "Amount" and "Check No." columns.

Accounts Payable – Trade Creditors This column should be used to record amounts due creditors.

If a subsidiary Accounts Payable Ledger is used, the amounts recorded in this column should be posted as credits to the individual creditor's account. A check off column is provided to indicate that amounts have been posted to the subsidiary ledger.


FCA (2/18)

DUAS FORMS DUAS-145

CASH DISBURSEMENTS AND PURCHASE JOURNAL – Cont’d.

Cash Discount Earned This column should be used to record the amount of any cash discount which has been deducted when a check is issued.

General Credits This column should be used to record credits to accounts other than those for which columns have been provided.

The account number should be inserted next to the amount in the space provided. These amounts should be summarized by account number at the end of the month and posted as credits to the appropriate accounts in the General Ledger. Those accounts requiring subsidiary records should be posted on a daily basis to the subsidiary records.

DEBITS SIDE

Inventories

A separate column has been provided for each of the principal inventory accounts (except new vehicles – which are recorded in the New Vehicle Purchase Journal). Thus, a minimum of summarizing will be necessary.

NOTE: In the case of used vehicles, the stock number should appear in the "Payee or Vendor" column.

Accounts Payable – Trade Creditors This column should be used to record the gross amounts charged (debited) to accounts payable. This will normally represent the payment to the Trade Creditor, clearing out the amount payable.

If a subsidiary Accounts Payable Ledger is used, the amounts recorded in this column should be posted as debits to the individual creditor's accounts.

Accounts Payable Vehicle Lien Payoffs This column should be used to record the amount of payment made to satisfy the applicable lien and/or encumbrance against a vehicle taken in trade.

NOTE: It would be helpful to enter the vehicle stock number and name of the customer as well as that of the Bank

or Finance Company when recording a lien payoff. Place this information in the "Payee or Vendor" column.

The lien should be paid off on the same day as it is assumed and the corresponding credit should be checked off in the journal in which the trade-in appears. By use of this method, a subsidiary record is not necessary.

Accounts Payable – Other Debit this column to record the payment of all accounts payable other than Trade Creditors and Vehicle Lien Payoffs.

Subsidiary records should be kept and individual account balances should be listed on Monthly Analysis Summary (DUAS-373). The total of the amounts listed should agree with the balance in this account.

Taxes – Sales – Vehicle Record in this column the payments made to local and state agencies for sales tax received on sales of new and used vehicles.

(2/18)


FCA 9-17

DUAS FORMS DUAS-145

CASH DISBURSEMENTS AND PURCHASE JOURNAL – Cont’d.

Taxes – Vehicle License and Title Fee This column should be used to record the payments made to taxing agencies for license and title fees received on new and used vehicle sales. Inventory Finance Liability – New Car and Truck This column should be used to record the payments to financing institutions to apply on loans secured by new cars and trucks. Inventory Finance Liability – Used Car and Truck This column should be used to record the payments to financing institutions to apply on loans secured by used cars and trucks. Inventory Finance Liability – Blank Record in this column the amount of payments to financing institutions to apply on loans secured by other merchandise. Repossessed Vehicle Losses – New Use this column to record the excess paid (above the estimated wholesale value less estimated reconditioning cost) for repossessed vehicles that were originally sold as new. Repossessed Vehicle Losses – Used This column should be used to record the excess paid (above the estimated wholesale value less estimated reconditioning cost) for repossessed vehicles that were originally sold as used. Departmental Expenses These columns are subdivided according to department and should be used to record and distribute expenses to the various departments; expense account numbers should be inserted in the "Acct. No." columns. At the end of the month, each column should be summarized according to expense account numbers and posted to the specific account and department on Expense Ledger Sheet, Form DUAS-197. General Debits This column should be used to record debits to accounts other than those for which columns have been provided. The account number should be inserted next to the amount in the space provided. The amounts for these accounts should be summarized at the end of the month and posted as debits to the appropriate accounts and subsidiary records.


FCA (2/18)

DUAS FORMS DUAS-149

NEW VEHICLE PURCHASE JOURNAL

This journal is provided to record all invoices on the purchase of new vehicles and other units handled by the New Vehicle Department. The acquisition of all new vehicles, whether by purchase from the factory or by transfer from another dealer, should be recorded in this journal.

NEW VEHICLE TRANSFERS

Transfers of new vehicles between dealers having similar sales agreements should not be recorded as sales but as inventory transfers only. It is recommended that such transfers be recorded in this journal; columns are provided here for most of the accounts affected by such transactions. Debit entries in credit columns and credit entries in debit columns should be recorded in red to denote deductions.

Invoices should be checked as to purchase specifications, equipment and receipt thereof, price, extensions, etc. To facilitate cross-reference with other records, it is recommended that the purchase of each new unit be recorded on a separate line. The subsidiary form, New Vehicle Inventory Record, Form DUAS-305, should be completed in detail for each new vehicle, and the totals verified with the purchase journal.

Provision has been made in this journal to record the date, invoice or shipping order number, source, stock number, model, and serial number. The blank amount columns should be used for repetitive accounts to reduce the summarizing of the "General" columns.

Columns listing the account numbers to be debited or credited should be totaled at the end of the month and posted to the account as indicated.

The amount columns should be used as follows:

DEBITS SIDE

Factory Receivable – Holdback This column should be used to record the amount of Holdback indicated on the factory invoice, or computed from the Confidential Price Bulletin, for each specific vehicle.

H. B. (Holdback) – Payment Date Record in this column, opposite the specific Holdback amount, the date on which settlement was received from the factory for "Factory Receivable – Holdback – New Cars and Trucks." Use of this column will serve to support the balance in Account 116-B, and eliminate the need for a subsidiary schedule of unpaid amounts.

New Vehicle Inventories New vehicle inventory account numbers should be assigned to each new vehicle line in accordance with the Chart of Accounts.

Each vehicle line should be assigned an individual column. The vehicle name and applicable account number should be recorded at the top and bottom of the column.

These columns should be used to record the cost (inventory value) of all new vehicles purchased.

Factory Receivable – Floor Plan Allowance This column should be used to record the amount of Basic Floor Plan Allowance for each specific vehicle. This is a double posting column; therefore, care should be exercised when computing amounts to be recorded here, and to assure that both accounts are posted at month-end.

(2/18)


FCA 9-19

DUAS FORMS DUAS-149

NEW VEHICLE PURCHASE JOURNAL – Cont’d.

Floor Plan Allowance – Payment Date This column should be used to record the date on which settlement was received from the factory for "Factory Receivables –Floor Plan Allowance."

Use of this column will serve to support the balance in Account 116-D and eliminate the need for a subsidiary schedule of unpaid amounts.

CREDITS SIDE

Finance Liability – New Cars and Trucks This column should be used to record the amount due financing institutions on new vehicles purchased.

General These columns should be used to record Debits and Credits to accounts for which special columns have not been provided.

The account number should be inserted in the column between the Debit and Credit amount columns. The amounts in each column should be summarized, by account number, at month-end and posted to the General Ledger accounts.


FCA (2/18)

DUAS FORMS DUAS-153

NEW VEHICLE DEPARTMENT SALES JOURNAL

This journal is provided to record all sales of the New Vehicle Department.

Each sale should be represented by an individual invoice, which should be entered in this journal and numerically accounted for on a Check Sheet (DUAS-482).

Credit memoranda issued for returns, or for allowances on sales, should be entered in this journal in red.

Provision has been made in this journal to record the date, invoice number, customer's name, and all related statistical information. The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. Additional blank columns are also provided for repetitive transactions (to one account), so as to reduce the summarization in the "General" column.

In addition, four memo columns are provided to record the Vehicle Gross Profit, Sales Commission, Salesman's Name, and Serial Number (of vehicle sold). This information will be helpful in the preparation of daily operating reports prepared for management.

Use of the column, "Payment Date – Special Vehicle Income," eliminates the necessity of a subsidiary record for this item.

The right-hand page provides spaces in the upper-left corner for recording cumulative unit sales. Use of this section will assist in preparation of the monthly financial statement.

The last two lines on each page have been separated to record column totals for double and single posting amounts. This separation will assist accountants in balancing and cross-footing the journal.

The amount columns should be used as follows:

General Debits

DEBITS

This column should be used to record debits and/or credits to accounts other than those for which columns have been provided. Use of this column as a credit column may be accomplished by recording the credit entry in red.

The account number should be inserted next to the amount in the space provided. The amounts in these accounts should be summarized at the end of the month and posted as debits, or credits to the various accounts in the General Ledger. Subsidiary records for accounts recorded in this column should be posted daily.

Contracts in Transit This column should be used to record the net amount to be received from financing institutions on approved customer finance contracts.

Receivables – Vehicle Accounts This column should be used to record the amount of unpaid balances on vehicle sales which are charged to customers on open account, or balances applied against previous deposits.

The amounts recorded in this column should be posted daily to the individual customer's account in the subsidiary ledger.

Receivables – Customer Notes This column should be used to record the face value of each note, accepted in settlement of a vehicle sale, which is to be carried by the dealership. Each charge in this column should be posted daily to the individual customer's account in the "Notes Receivable" subsidiary ledger.

(2/18)


FCA 9-21

DUAS FORMS DUAS-153

NEW VEHICLE DEPARTMENT – SALES JOURNAL – Cont’d.

Cash Sales This column should be used to record the amount of cash received from the customer on completion of sale. The check-off space provided in this column is used for daily reconciliation of the Cash Sales Columns between journals. Used Inventories: Cars, Trucks and Other (Blank) These columns should be used to record the appraised inventory value and assigned stock number of used vehicles taken in trade on new vehicle sales. Provision is made for recording used cars, trucks, and non- automotive units in separate columns. The stock number column applies to all three inventory columns.

CREDITS Accounts Payable Vehicle Lien Payoff This column should be used to record the amount of lien, against a used vehicle taken in trade, which is to be paid by the dealership. Sales Tax This column should be used to record any sales tax included on the Vehicle Invoice. License and Fees This column should be used to record the amount charged to the customer on the Vehicle Invoice for license and title fees.

Make: Vehicles

SALES and COST OF SALES

These columns are provided to record the retail sales price of new vehicles, the appropriate discount and/or overallowances, related cost of sales, and any special vehicle income that may apply to those vehicles. Four separate sections are provided for recording new vehicle makes. The columns should be identified by inserting the make and the appropriate account number. The account numbers at the top and bottom of these columns must be completed by inserting one or two digits. These numbers will then correspond with the applicable make of vehicle named at the top. If additional columns are needed to accommodate more carlines, another form may be used as on extension sheet or separate journals maintained by carline. Finance and Insurance Income It is recommended that all income resulting from financing vehicle sales be recorded at the time the sale is recorded. This column should be used to record income resulting from financing of all New Vehicle Department sales (including "Other Automotive" units). In the event more than one finance company is used, space is provided for the company names.

Service Contracts These columns are used for any FCA Service Contract Plans or other Extended Protection Plans sold in conjunction with the vehicle sale.

Other These columns are provided for use in the event that all other sales and cost of sales columns are utilized, and additional space is still required. They may be used to record the sale of new non-automotive units, other automotive units (when sold apart from new vehicles), or fleet sales; all related discounts, over allowances, and cost of sales.


FCA (2/18)

DUAS FORMS DUAS-157

USED VEHICLE DEPARTMENT – SALES JOURNAL

This journal is provided to record all sales relative to the Used Vehicle Department.

Provision has been made in this journal to record the date, invoice number, customer's name, and stock number of the unit sold, as well as three (3) memo columns. The memo columns provided are Vehicle Gross Profit, Sales Commission, and Salesman's Name. This information will be helpful when preparing daily operating reports for management.

For convenience when balancing the journal, and when posting to the General Ledger, the two lines at the bottom of the journal page indicate whether the column totals should be double posted or single posted. Cross-footing the "Single Posting Totals" line will determine whether or not the journal is in balance.

The right-hand page provides spaces in the upper-left corner for recording cumulative unit sales. Use of this section will assist in preparation of the monthly financial statement.

The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. The columns should be used as follows:

General This column should be used to record debits and/or credits to accounts other than those for which columns have been provided. Use of this column as a credit column may be accomplished by recording the credit entry in red.

The account number should be inserted next to the amount in the space provided. The amounts in these accounts should be summarized at the end of the month and posted as debits, or credits, to the various accounts in the General Ledger. Accounts requiring subsidiary records should be posted to the respective record daily.

Contracts in Transit

DEBITS

This column should be used to record the net amount to be received from financing institutions on approved customer finance contracts.

Receivables – Vehicle Accounts Use this column to record the following:

1. Any unpaid balance on used vehicles which are charged to customers' open accounts. 2. Customer deposits on used vehicles.

The amounts recorded in this column should be posted daily to the individual customer's account in the subsidiary ledger.

Receivables – Customer Notes This column should be used to record the face value of each note, accepted in settlement of a used vehicle sale, which is to be carried by the dealership.

Each charge in this column should be posted to the individual customer's account in the notes receivable subsidiary ledger.

Cash Sales This column should be used to record the amount of cash received from the customer on completion of sale. The check-off space provided in this column is used for daily reconciliation of the Cash Sales Columns between journals.

(2/18)


FCA 9-23

DUAS FORMS DUAS-157

USED VEHICLE DEPARTMENT – SALES JOURNAL – Cont’d.

Used Inventories: Cars, Trucks and Other (Blank) These columns should be used to record the appraised inventory value and the assigned stock number of used vehicles taken in trade on used vehicle sales. Provision is made for recording used cars, used trucks, and non- automotive units in separate columns. The stock number column applies to all three inventory columns.

CREDITS

Accounts Payable – Vehicle Lien Payoffs This column should be used to record the amount of lien assumed by the dealership against used vehicles taken in trade.

Sales Tax This column should be used to record any sales tax included on the Vehicle Invoice.

License and Fees This column should be used to record the amount charged to the customer on the Vehicle Invoice for license and title fees.


CARS and TRUCKS These columns are provided to record the retail and wholesale sales prices of used cars and trucks, all discounts or over allowances, all related cost of sales, and appropriate reconditioning costs. The reconditioning costs for wholesaled units should be included in the Cost of Sales Account – Wholesale.

NON-AUTOMOTIVE and OTHER These columns are provided to record the retail and wholesale sales prices of used non-automotive units and other automotive units (when sold apart from vehicles), all discounts or over allowances, and all related cost of sales.

AUTO FINANCE and INSURANCE INCOME This column should be used to record all income resulting from the financing of used cars, truck, or other automotive sales only. It is computed in accordance with the terms of the financing institutions' agreement and entered simultaneously with the recording of the used vehicle sale.

SERVICE CONTRACTS These columns are used for any FCA Service Contract Plans or other Extended Protection Plans sold in conjunction with the vehicle sale.

BLANK COLUMNS These two columns are provided as additional space to segregate any elements desired.


FCA (2/18)

DUAS FORMS DUAS-161

SERVICE AND PARTS SALES JOURNAL – REPAIR ORDER SALES

This journal is provided to record all repair order sales by the Service and Body Shop Departments which is chargeable to a customer or extended service contract plan.

This form may be used to record such sales in detail or, if desired, the Daily Summary – Repair Order Sales and Counter Sales, Form DUAS-337, may be used to record the detail, and a summary of sales transferred daily to this journal. Provision has been made on this form for recording "Split" transactions in which a portion of a customer's repair order may be an internal sale, thereby eliminating the necessity of entering such sales in the Internal Sales Journal.

The right-hand page provides spaces in the upper-left corner for recording the number of completed customer repair orders. Use of this section will assist in preparation of the monthly financial statement. The last two lines on each page have been separated to record column totals for double and single posting amounts. This separation will assist accountants in balancing and cross-footing the journal. Space is provided to record the date, repair order number, and customer name. The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. Additional blank columns are also provided to accommodate your particular operation and reduce postings to the "General" column. The amount columns should be used as follows:

DEBITS and CREDITS

Service and Parts Accounts Receivable This column should be used to record the charges to open accounts of customers to whom credit has been extended. The amounts recorded in this column should be posted daily to the individual customer's account in the subsidiary ledger.

Cash Sales This column should be used to record the amount of Cash sales. The total of this column for each day should agree with the amount entered for "Service and Parts – Repair Order Sales" in the "Cash Receipts Journal" (DUAS-141). The check-off space provided in this column is used for daily reconciliation of the Cash Sales column between journals.

General This column should be used to record debits or credits to accounts other than those for which columns have been provided. The account number should be inserted next to the amount in the space provided. Use of this column for credits may be accomplished by recording the credit entry in red. The amounts in this column should be summarized at the end of the month and posted to the appropriate account in the ledger.

Sales and Use Tax This column should be used to record the amount of sales and/or use tax as shown on the customer's repair order.


This section has been separated into three (3) major areas. Each major area has been provided with a sales and cost column for the various activities within the specific area. The major areas and their related activities are arranged in account number sequence. This arrangement will be of assistance when recording the customer repair order to the journal and when posting journal balances to the general ledger. The three major areas and related activities are:

(2/18)


FCA 9-25

DUAS FORMS DUAS-161

SERVICE AND PARTS SALES JOURNAL – REPAIR ORDER SALES Cont’d.

1. MECHANICAL SERVICE Customer – Service Contracts – Sublet Work – Gas, Oil, and Lubricants

The "Sales" columns should be used to record the appropriate sales price of service labor performed. The "Cost of Sales" columns should be used to record the actual cost of employees' time (for the related sale) as shown on the repair order.

These Sublet Work sales and cost columns should be used to record the sales price of mechanical repairs (performed outside the dealership) and cost thereof.

The Gas, Oil, and Lubricants sales and cost columns should be used to record the sales price of such items sold to customers on repair orders and the cost thereof.

2. BODY and PAINT SERVICE

Customer – Sublet B & P – B & P Shop Materials

In those dealerships where a regular body and paint shop is operated, these columns should be used to record the "Sales" and "Cost of Sales" of such operations.

These Sublet – B & P columns should be used to record the sales price and cost of body and paint repairs (performed outside the dealership) whether or not the dealership operates a regular body and paint shop.

3. PARTS and ACCESSORIES

Mechanical – Service Contracts – Body and Paint

The "Sales" columns should be used to record the appropriate sales price of parts and accessories sold on repair orders. The "Cost of Sales" columns should be used to record the respective inventory value of such parts and accessories sold.


FCA (2/18)

DUAS FORMS DUAS-165

PARTS AND ACCESSORIES JOURNAL – COUNTER SALES

This journal is provided to record all Parts Department counter sales transactions.

This form may be used to record such sales in detail or, if desired, the Daily Summary – Repair Order Sales and Counter Sales, DUAS-337, may be used to record the detail. When the Daily Summary is used, the amount columns should be totaled and transferred to this journal daily. All credit memorandums should be entered in red. Provision is made in this journal to record date, parts counter invoice number, and customer name. Space has been provided in the upper-left corner for recording the number of completed parts counter tickets. Use of this section will assist in preparation of the monthly financial statement. The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. Additional blank columns are also provided for repetitive transactions (to one account), so as to reduce the summarization in the "General" column. The last two lines on each page have been separated to record column totals for double and single posting amounts. This separation will assist accountants in balancing and cross-footing the journal.

DEBITS and CREDITS

Service and Parts Accounts Receivable – This column should be used to record charges to open accounts of customers to whom credit has been extended. The amounts recorded in this column should be debited daily to the individual customer's account in the subsidiary ledger.

Cash Sales – This column should be used to record the amount of cash received on sales. The total of this column for each day should agree with the amount entered for "Parts & Accessories – Counter Sales" in the Cash Receipts Journal (DUAS-141). The check-off space provided in this column is used for daily reconciliation of the Cash Sales Columns between journals.

Sales and Use Tax – This column should be used to record the amount of sales and/or use tax as shown on the parts counter invoice.

Blank Columns – Use of these columns will reduce the summarization of the General Column. They may be used for such items as wholesale allowance earnings, memo taxable sales amounts, etc.


This section has been separated into four (4) areas. Each area has been provided with a sales and cost column. The columns are arranged in account number sequence. This arrangement will be of assistance when recording the parts counter invoice to the journal and when posting journal balances to the general ledger:

Counter-Retail – Wholesale The "Sales" columns should be used to record the appropriate sales price of all automotive parts and accessories sold. The "Cost of Sales" columns should be used to record the related cost (dealer price), by individual invoice, or parts and accessories sold.

Blank Columns These sales and cost columns have been provided for sales of non-automotive or like-items, with a consistent volume, for which columns have not been specifically provided. Use of these columns will reduce the summarization of the General Column at month-end.

General – This column should be used to record debits or credits to accounts other than those for which columns have been provided. The account number should be inserted next to the amount in the space provided. Use of this column for credits may be accomplished by recording the credit entry in red. The amounts in this column should be summarized at the end of the month and posted to the appropriate account in the ledger.

(2/18)


FCA 9-27

DUAS FORMS DUAS-169

WARRANTY SALES JOURNAL AND CLAIMS REGISTER

This form serves a two-fold purpose: 1. As a form of original entry for recording all warranty repair orders, including transportation claim repairs

and road-ready pre-delivery inspections. 2. As a claims register for maintaining control and providing records of subsequent disposition of the claims.

A separate warranty sales journal and claims register should be maintained for each manufacturer's products sold by the dealership.

The left-hand page provides space in the upper-right corner for recording the number of completed repair orders. Use of this section will assist in preparation of the monthly financial statement.

The last two lines of each page have been separated to record column totals for double and single posting amounts. The separation will assist accountants in balancing and cross-footing the journal.

Provision has been made in this journal to record the date, customer name, warranty repair order number, *memo repair order number, vehicle serial number, and summary list number.

*NOTE: This column is provided for use by those dealers who prepare a dealership Repair Order on which the

work is originally performed, and subsequently transferred to a warranty repair order for claim submission. In such instances, the original R.O. number should be entered in this column for purposes of cross- reference. If the work is originated on a WRO, then the WRO number may be entered here in addition to the left page.

The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. The columns are used as follows:

Factory Receivable – Warranty

DEBITS

This column should be used to record all amounts due from the factory for warranty claims. For those claims involving a customer deductible amount payable by the customer, the deductible should not be included in this account, but rather, recorded in the General Debits column as a receivable or cash transaction from the customer. For claims against manufacturers, other than FCA, this column should be changed to read "Other Receivables – A/C 114."

Mechanical: Labor


The "Sales" column should be used to record the warranty sales price of labor.

The "Cost of Sales" column should be used to record the cost of such labor, as indicated on the applicable Daily Time and Job Ticket (DUAS-139), on the repair order.

Road Ready The "Sales" column should be used to record the sales price of labor.

The "Cost of Sales" column should be used to record the cost of such labor, as indicated on the applicable Daily Time and Job Ticket (DUAS-139), on the repair order.

Mechanical: Sublet The "Sales" column should be used to record the warranty sales price of all sublet work, except body and paint.

The "Cost of Sales" column should be used to record the sublet cost as shown on the warranty repair order.


FCA (2/18)

DUAS FORMS DUAS-169

WARRANTY SALES JOURNAL AND CLAIMS REGISTER – Cont’d.

Body and Paint: Labor These columns should be used only by those dealerships having their own Body Shop.

The "Sales" column should be used to record the warranty sales price of body and paint labor performed.

The "Cost of Sales" column should be used to record the cost of such labor, as indicated on the applicable Daily Time and Job Ticket (DUAS-139), attached to the repair order.

Body and Paint: Sublet The "Sales" column should be used to record the warranty sales price of all sublet work performed, except mechanical work.

The "Cost of Sales” column should be used to record the sublet cost as shown on the Warranty Repair Order.

Body and Paint: Shop Material These columns should be used only by those dealerships having their own Body Shop.

The "Sales" column should be used to record the warranty sales price of shop materials as shown on the warranty repair order.

The "Cost of Sales" column should be used to record the inventory value of such material.

Parts and Accessories: Mechanical The "Sales" column should be used to record the warranty sales price of parts and accessories as shown on the warranty repair order.

The "Cost of Sales" column should be used to record the inventory value of such sales.

Parts and Accessories: Body and Paint These columns should be used only by those dealerships having their own Body Shop.

The "Sales" column should be used to record the warranty sales price of body parts and accessories as shown on the warranty repair order.

The "Cost of Sales" column should be used to record the inventory value of such sales.

General Debit This column should be used to record debits or credits to accounts other than those for which columns have been provided.

The account number should be inserted next to the amount in the space provided. The amounts for these accounts should be summarized at the end of the month and posted as debits or credits to the various accounts. Use of this column for credits may be accomplished by recording the credit entry in red.

(2/18)


FCA 9-29

DUAS FORMS DUAS-169

WARRANTY SALES JOURNAL AND CLAIMS REGISTER – Cont’d.

CLAIMS REGISTER

Summary List Number Use of this column, to record receipt of payment from the factory (by inserting the "List Number"), will eliminate the need for a subsidiary ledger, or schedule, to support the Factory Receivable – Warranty account.

Amount Received This column is provided to record the remittance for each individual warranty claim. Enter the amount on the line corresponding to the original claim entry.

Difference – Under or (Over) These monthly columns are used to record any variance between the claim amount and remittance. In the event there is a difference, the amount of such difference should be recorded in the "month-column" in which remittance was received. This will help to identify the individual differences to the particular WRO, and will support the total adjustment made in that month.

FINANCIAL STATEMENT, PAGE 4, RECEIVABLE ANALYSIS SECTION

Warranty Suspense (Memo) On occasion when claims are processed and paid by the factory there will be payments denied or rejected. When reported to the dealership on a claims statement, the normal practice is to remove the claim from the factory receivable and charge it to the appropriate policy adjustment accounts. Then, when the claim is resubmitted to the factory, it is removed from the policy adjustment accounts and re-established as a factory receivable. When final settlement is received, disposition is made in the normal manner. The Warranty Suspense (Memo) dollar amount represents the total of these "resubmitted" claims, which are included in the factory receivable account total on the line above in this section.

In order to determine this (Memo) dollar amount for "resubmitted" claims, with the least effort, it is recommended that a separate sales journal be maintained for recording resubmitted claims. This journal would be handled in the normal manner and the total unpaid claims would represent the Warranty Suspense (Memo) dollar amount.


FCA (2/18)

DUAS FORMS DUAS-173

INTERNAL SALES JOURNAL

This journal is designed for recording all internal repair orders (and parts counter invoices) covering internal sales to the various departments of the dealership, which do not include any amount chargeable to customers.

"Split" transactions, in which a portion is chargeable to customers and a portion is an internal charge, should not be recorded in this journal. Such transactions should be recorded entirely in the Service and Parts Journal – Repair Order Sales, Form DUAS-161, or the Parts and Accessories Journal – Counter Sales, DUAS-165, whichever is applicable.

Maintenance men, porters, etc., should not be charged to the various departments in this journal. Their wages should be charged directly to the applicable departments via the Payroll Journal, Form DUAS-177.

The left-hand page provides spaces in the upper-right corner for recording the number of completed internal repair orders. Use of this section will assist in preparation of the monthly financial statement.

The last two lines of each page have been separated to record column totals for double and single posting amounts. This separation will assist accountants in balancing and cross-footing the journal.

When recording internal sales, the following information should be entered in the spaces provided: date, repair order number (or parts invoice number), and stock number of the vehicle involved.

The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. Additional blank columns are also provided for repetitive transactions (to one account), so as to reduce the summarization in the "General" column. The columns are as follows:

DEBITS

Inventories – New Vehicles This column should be used for recording, to the appropriate new vehicle inventory account, all accessories, parts, and/or other items – whether added or removed – at the internal sales price, or at the inventory transfer price. Labor charges should be recorded at the internal sales price.

At the end of the month the amounts should be summarized by account number and the totals posted to the new vehicle accounts indicated. The individual amounts should be posted daily to the applicable Vehicle Inventory Record.

Inventories – Used Vehicles These columns should be used for recording to the appropriate used vehicle inventory account, all reconditioning, parts, accessories, and/or other items – whether installed or removed – at the internal sales price or at the inventory transfer price.

The individual amounts should be posted daily to the applicable Vehicle Inventory Record.

Inventories – Parts and Accessories This column should be used to record the inventory value of factory-installed accessories removed from new vehicles and placed in the parts and accessories inventory. The difference between accessory inventory value and the new vehicle installed value, if any, should be charged to New Vehicle Inventory Maintenance, Account 303 (refer to comments in Account 130).

New Vehicle Inventory Maintenance This column should be used to record the costs of maintaining the new vehicle inventory. The difference between the accessory inventory value and new vehicle installed value, if any, on accessories removed from new vehicles and placed in accessory inventory and the internal sales price of labor for accessory removal should also be recorded in this column.

(2/18)


FCA 9-31

DUAS FORMS DUAS-173

INTERNAL SALES JOURNAL – Cont’d.

Policy Service These columns should be used to record the internal sales price of repairs, adjustments or replacements to vehicles, service work, parts, or accessories for which there will be no customer charge or manufacturers' credit. Separate columns are provided for charging this expense to the department which received credit for the original sale.

Departmental Expenses These columns are subdivided according to departments for distribution of expense charges to the various departments.

The expense account numbers should be inserted in the "Acct. No." column, and the related debit charge in the applicable departmental "Amount" column.

At the end of the month, each column should be summarized according to expense account number and the amounts posted to the specific account and department on the Expense Ledger Sheets (DUAS-197).

General This column should be used to record debits or credits to accounts other than those for which columns have been provided. Use of this column for credits may be accomplished by recording the credit entry in red.

The account number should be inserted next to the amount in the space provided. The amounts for these accounts should be summarized at the end of the month and posted as debits or credits to the various accounts.


Labor Internal Separate sets of columns are provided for mechanical and body and paint.

The "Sales" column should be used to record the internal sales price of labor, including automotive, non- automotive, mechanical, body and paint, performed by the Service Department for the various departments of the dealership on completed internal repair orders.

The "Cost of Sales" column should be used to record the cost of such labor as indicated on the applicable Daily Time and Job Ticket (DUAS-139), attached to the internal repair order.

Sublet Work The "Sales" column should be used to record the internal sales price of all sublet work, except body and paint, performed for the various departments of the dealership.

The "Cost of Sales" column should be used to record the sublet cost as shown on the Internal R.O.

Gas, Oil and Lubricants The "Sales" column should be used to record the internal sales price of gas, oil, lubricants, antifreeze, etc. sold internally.

The "Cost of Sales" column should be used to record the inventory value of such items.

Sublet Work – Body and Paint The "Sales" column should be used to record the internal sales price of sublet work performed excluding mechanical work performed for the various departments of the dealership.

The "Cost of Sales" column should be used to record the sublet cost as shown on the Internal R.O.


FCA (2/18)

DUAS FORMS DUAS-173

INTERNAL SALES JOURNAL – Cont’d.

Body and Paint – Shop Material These columns should be used only by those dealerships having their own body shop.

The "Sales" column should be used to record the internal sales price of shop materials sold to the various departments of the dealership.

The "Cost of Sales" column should be used to record the inventory value of such material.

Parts and Accessories – Internal The "Sales" column should be used to record the internal sales price of all automotive parts and accessories sold to the various departments of the dealership.

The "Cost of Sales" column should be used to record the inventory value of such items.

Other These "Sales" and "Cost of Sales" columns, and the blank columns to the left, are available for recording all other internal sales for which specific columns have not been provided. At month-end, these columns should be summarized and the individual account totals posted to the respective accounts in the general ledger.

(2/18)


FCA 9-33

DUAS FORMS DUAS-177

PAYROLL JOURNAL

The earnings of all employees, and account distribution of such earnings, should be recorded on this journal.

Provision has been made to record date of pay period ended, regular and overtime hours worked, payroll check numbers, and employees' names. Columns listing the account numbers to be debited or credited should be totaled at the end of the month and posted to the accounts as indicated. Memorandum columns indicated by "Memo" are provided to facilitate computation of accounting distribution, or to supply necessary statistical information.

The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. Additional blank columns are also provided for repetitive transactions (to one account), so as to reduce the summarization in the "General" column. The columns are as follows:

Gross Earnings These columns are provided to record the gross earnings of employees in accordance with the basis of compensation. Earnings for regular and overtime hours worked should be recorded in the columns indicated. The blank column is provided for recording other compensation such as commissions, bonuses, incentives, etc. The total earnings as detailed in these columns should be entered in the "Total Gross Earnings" column. The amounts appearing in this column should be distributed to the appropriate payroll accounts on the right-hand page.

Entries made in these columns should be obtained from, or supported by, subsidiary records such as attendance record; Daily Time and Job Ticket, Form DUAS-139; or Salesmen's Daily Compensation Record, Form DUAS-136.

Deductions These columns are provided to record the deductions, to be made from total gross earnings, when computing the net pay due employees. F.I.C.A. and applicable withholding taxes should be entered in the columns indicated. The blank columns should be used to record repetitive deductions; the account numbers to be credited should be inserted at the foot of each column. The total of these columns should be entered in the "Total Withheld" column.

Net Pay The amount to be entered in this column for each employee is obtained by subtracting the amount of the "Total Withheld" column from the "Total Gross Earnings" column.

Accrued Payroll This column is used only at the end of the month and is explained in instructions provided under "Month-End Accrual" below.

Gross Payroll Distribution These columns should be used to record the gross earnings charged (debited) to the various accounts indicated in the column headings.

General Debits The "General Debit" column should be used to record debits or credits to accounts other than those for which columns have been provided. This column should be summarized at the end of the month and posted to the various accounts. Use of this column for credits may be accomplished by recording the credit entry in red.


FCA (2/18)

DUAS FORMS DUAS-177

PAYROLL JOURNAL – Cont’d.

MONTH-END ACCRUAL

When a pay period extends over the end of the month, that portion of the earnings which applies to the current month should be determined in order that each month's operations may be charged with all expenses, etc., applicable to it.

The "Accrued Payroll" column should therefore be used to record the amounts earned at the end of those months (where the end of the pay period does not coincide with the end of the month). The amounts earned, but not paid, should be determined from the attendance records, Daily Time and Job Tickets, or Salesmen's Daily Compensation Record.

To facilitate proper recording of this accrual and assure inclusion of all employees, the following procedure is suggested:

At month-end –

1. If space is available on the last page of the regular Payroll Journal, Steps 3 through 6 may be performed thereon. If space is not available, then on a blank, right-hand sheet of this journal, record the accumulated monthly totals of the "Gross Payroll Distribution" columns (after the last complete payroll of the month) on the "Brought Forward" line.

2. Insert this sheet opposite the sheet containing the names, etc., of employees included in the last complete payroll for the month, and in front of the distribution sheet for that payroll period.

3. Enter in the "Accrued Payroll" column the time worked and amount of earnings, from the last complete pay period to the end of the month.

4. Distribute the amount of these earnings to the applicable account columns. 5. Enter sub-totals for all columns used in recording these entries (Step 4). If a separate blank sheet was

used, transfer these sub-totals to the regular right-hand journal sheet. 6. Total columns on both sides of the journal and post as indicated.

At the beginning of the following month – Turning to new pages for the next month, the "reversal" of the entries relative to the payroll thus accrued, will be accomplished by the following procedure:

A. On the line directly below the column headings on the right-hand payroll sheet used for the new month, enter, in red, the previous month's accrued payroll (sub-totals recorded in Step 5) in the appropriate columns.

B. Record earnings and resulting gross payroll distribution for completed payroll period in the normal manner. C. In footing columns for the first payroll, figures in (A) above will be reflected as deductions, thereby

reducing the amounts chargeable to this month's operations to that actually earned in the month.

At the end of a month when the payroll period and month-end coincide, there is no payroll accrual. When the current month-end accrual is less than the previous month-end accrual, a red balance will remain in the "Accrued Payroll" column. The amount of this red balance should be posted as a debit to Accrued Payroll, Account 210-A.

(2/18)


FCA 9-35

DUAS FORMS DUAS-181

GENERAL JOURNAL

This journal is provided to record entries which cannot be conveniently recorded in one of the other journals.

Columns are provided to record the date, explanation of entry, account name and number, and the amount of debits and credits. After each amount column, space is provided to check the amounts as they are posted to their respective accounts in the general ledger and subsidiary records.

The "Explanation" column should be used to explain in detail every entry recorded in this journal, as well as such information as may be referred or posted to subsidiary records.

Inasmuch as the Standard Entries Journal (DUAS-185) is provided to record all standard monthly entries repetitively posted to the same accounts each month, the entries in the General Journal should be only those of an unusual or non-recurring nature.


FCA (2/18)

DUAS FORMS DUAS-185

STANDARD ENTRIES JOURNAL

This journal is provided to record recurring entries which otherwise would be recorded in the general journal. Use of the Standard Entries Journal for these entries eliminates the need for rewriting the accounts and explanations each month.

The journal should be headed with a page number and the year. Account Numbers and Names should be recorded in the spaces provided. Record the applicable amounts for each month in the appropriate debit or credit Monthly Columns. For some entries, the amount of the item will be determined each month (for example, bank service charges). Place a check mark (3) after each amount when it has been posted to the general ledger. A brief description (including inception date, nature, etc.) of the transaction should be made in the Explanation section on the backside, and adequately referenced for identification to the specific transaction.

Monthly Standard Journal Entries

The following is a listing of suggested entries to be recorded monthly in the Standard Entries Journal: 1. Bank service charges. 2. Factory Receivable – Warranty: to record the net adjustment to the receivables based on the total of the

differences recorded for the month in the warranty service claims register. (This adjustment could also be made at the time the Warranty Claims Statement is received and recorded.)

3. Allowance for Doubtful Receivables: to adjust the allowance to a balance equal to receivables over 90 days past due.

4. Inventory – Used Vehicles: to adjust inventory value based on monthly reappraisal. 5. Inventory Adjustments – Parts and Accessories: to record monthly provision for losses. 6. Work in Process – Labor: to reverse the prior month's provision, and to set up the current month's provision

for labor on uncompleted or unbilled repair orders and unapplied time. 7. Inventories – Various: to record month-end physical inventory value and to distribute cost of material used

or sold during the month. 8. Floor Plan Assistance: to set up factory receivable and credit expense for supplemental assistance

earnings. 9. Prepaid Expenses – Various: to reverse the prior month's balance, and to record the current month's

balance of prepaid items such as fuel oil and postage; to write off monthly expenses. 10. Accumulated Depreciation and Amortization – Various: to record the monthly provision for depreciation and

amortization of capital assets, lease vehicles, etc. 11. Accrued Payroll Taxes: to set up the employer's portion of payroll taxes. (Note–these accruals could also

b e set up in the payroll journal when recording the distribution of salaries and wages.)

12. Accrued Federal Unemployment Taxes: to record monthly accrual. 13. Other Payroll Deductions: to transfer employees' portion to expense (contributory plans). 14. Accrued Bonuses: to set up the current month's accrual. 15. Accrued Vacation Pay: to record monthly accrual for estimated vacation pay earned by applicable

employees based on dealership's policy or on terms of contract. 16. Accrued Pension and Profit Sharing Plans: to set up the monthly accrual. 17. Accrued State and Local Taxes: to set up the monthly accrual.

(2/18)


FCA 9-37

DUAS FORMS DUAS-185

STANDARD ENTRIES JOURNAL – Cont’d.

18. Accrued Insurance: to set up the estimated monthly accrual for workmen's compensation insurance and other types of insurance which have the premium determined at a later date.

19. Accrued lnterest: to set up the monthly accrual for interest expense incurred which is payable in a subsequent month. (Note – if interest payments are made monthly, no interest accrual is required.)

20. Other Accrued Expenses: to set up other monthly accruals, as required. 21. Estimated Income Tax – Current Year: to record the monthly adjustment of the accumulated provision for

estimated taxes based on taxable income to date for the current year.


FCA (2/18)

DUAS FORMS DUAS-191

GENERAL LEDGER – BALANCE SHEET

These forms are used to accumulate postings made from the journals for the Assets, Liabilities, Net Worth, and the Other Income and Other Deductions accounts.

Each page of the General Ledger should be identified as to account name, account number, and page number (if more than one General Ledger page is required for a specific account). Forms are available with pre-headed account numbers and names. Use of these forms will assist accountants at year-end when preparing for the new accounting period.

All postings to the General Ledger, from the journals, should record dates, posting references, and dollar amounts.

(2/18)


FCA 9-39

DUAS FORMS DUAS-194

GENERAL LEDGER – SALES AND COST OF SALES LEDGER

This Ledger Sheet provides for posting all the Sales and Cost of Sales accounts for the month and year-to-date This form has been designed to assist accountants in their month-end closing and financial statement preparation. Columns have been placed in the same sequence as they appear on the financial statement. Provision has been made so that "net amounts" for sales, gross profits, and units may be readily transcribed from the ledger sheet to the financial statement. The account number, page number, and account name should be inserted on each sheet. These forms are available with pre-headed account numbers and names. Use of these pre-headed forms will assist accountants at year-end when preparing for the new accounting periods. Columns are pre-headed and identified with names and suffix-letters. These suffix-letters may be bracketed "(A)" to designate the account is a normal credit balance, or unbracketed "B" to designate the account as a normal debit balance account. A Basic Account Number may have 1, 2, or 4 suffix-letters, all of which would be recorded on the same ledger page in the appropriate columns. Year, Month and Day

Each month, the appropriate month and day should be entered here so as to identify when the posting was made.

Posting Reference This column is provided for recording the journal code and page number from which amounts are posted in the applicable columns.

Sales This column is provided for posting the gross amount of "Sales" (A Accounts), and the applicable "Discounts and Over allowances" (B Accounts).

Cost of Sales These three "Cost of Sales" columns provide for the posting of the prime cost (C Accounts); applicable special vehicle income, reconditioning, repossessed vehicle loss, finance and insurance income, used vehicle write-down, unapplied time, purchase discount, wholesale compensation, or parts and accessories inventory adjustment (D thru G Accounts); and computation of net cost. NOTE: Cost of Sales Accounts D thru G should not be included on the same Ledger Sheet as "C" Cost of

Sales Accounts unless the Basic Account Numbers are the same, for example: Special Vehicle Income, Account 408-D, would be included on the Ledger Sheet for sales and costs of all New Cars – Retail (Accounts 408-A, B, and C). However, any finance income derived from the retail sale would be recorded in Finance and Insurance Income – Auto, Account 457-F. This account would have its own Ledger Sheet and would include finance and insurance income from all automotive sales in the New Vehicle Department, regardless of car line.

Memo Gross Profit This column provides for the recording of the "Gross Profit" by subtracting the Net Cost column from the Sales column. Use of this column will facilitate preparation of the monthly financial statement.

Units This column provides for posting the number of units sold for that particular product (vehicles, finance

c o n t r a c t s , repair orders, etc.).

Year-To-Date (Section) These columns provide for the accumulation of the amounts in the corresponding month columns on a year-to-date basis.


FCA (2/18)

DUAS FORMS DUAS-197

GENERAL LEDGER – EXPENSE LEDGER

The purpose of this form is to provide for the recording of all amounts chargeable to each particular expense account.

An Expense Ledger Sheet should be prepared for each expense account (on the Chart of Accounts) that is applicable to the dealership's operation.

Provision is made in the "Balance" column to record the month and year-to-date balances. The posting reference and date should always be shown for each debit or credit entry.

Departmentalization of Fixed Expenses is not a requirement of the Dealer Uniform Accounting System. However, the Expense Ledger provides a section entitled "Departmental Expense Distribution." This section has been provided for those Dealerships where departmentalization of Fixed Expenses is desired.

(2/18)


FCA 9-41

DUAS FORMS DUAS-300

SUBSIDIARY LEDGER SHEET

The purpose of this form is to provide the details (by individual item, customer, etc.) for various general ledger accounts, such as:

1. Accounts Payable (when Accounts Payable Voucher Envelope is not used) 2. Accounts Receivable 3. Notes Payable 4. Notes Receivable 5. Deposits 6. Any other control accounts

Postings to these forms should be made, daily, at the same time the transaction is recorded in the journal. At the end of each month, the balances on these Subsidiary Ledger Sheets (the net differences between the total debit balances and the total credit balances) should agree with the balance of the corresponding control account in the general ledger.


FCA (2/18)

DUAS FORMS DUAS-305-1

NEW VEHICLE INVENTORY RECORD

The purpose of this form is to provide a detailed record of each new vehicle. This form should be prepared for each new unit, when the unit is physically placed in inventory.

This form (original and duplicate copy) is provided to record pertinent details relative to new vehicles, and the gross profit resulting from the ultimate sale of such vehicles.

Full particulars regarding each new vehicle received should be recorded in the proper sections of this form. The duplicate copy provides a stock record for the sales department. The original copy provides a subsidiary record for use in the office to support the various vehicle inventory and finance liability accounts, and also for use by dealership management to analyze vehicle sales and gross profits after units are sold.

When each new vehicle is received, a stock number should be assigned, and the applicable sections of this form should be completed. Provision is made to record floor-plan financing information as well as accessories installed by the dealership. A separate form should be used for each new unit purchased. NOTE: When physically placed in inventory, each new unit of an "Other Automotive" or "Non-Automotive" nature

(as outlined in the descriptions of Inventory Accounts 134 and 137) should be assigned a stock number (using a separate series of numbers) and should be recorded on a New Vehicle Inventory Record. Subsequent sales data should be detailed for these units in the same manner as for automotive vehicles.

The "Inventory Cost" section is designed so that the initial cost, each individual addition or reduction in cost, current inventory cost, and Total Inventory Cost at time of sale may be shown separately.

The duplicate copy should be removed and given to the New Car or Truck Sales Manager. The original should be filed in the new car or truck inventory record file in the business office.

When each new unit is sold, pertinent information applicable to the sale, description of trade, computation of gross profit, and salesman's commission should be recorded in the spaces provided.

(2/18)


FCA 9-43


USED VEHICLE INVENTORY RECORD

The purpose of this form is to provide a detailed record of each used vehicle. This form should be prepared for each used unit when the unit is physically placed in inventory.

This form (original and duplicate copy) is provided to record pertinent details relative to used vehicles, and the gross profit resulting from the ultimate sale of such vehicles.

Full particulars regarding each used vehicle received should be recorded in the proper sections of this form. The duplicate copy provides a stock record for the sales department. The original copy provides a subsidiary record for use in the office to support the various vehicle inventory and finance liability accounts, and also for use by dealership management to analyze vehicle sales and gross profits after units are sold.

A separate form should be prepared for each used vehicle. Provision is made in the "Inventory Cost" section for showing the net appraised value of the used unit, inventory reappraisal adjustments, current inventory value, and Total Inventory Cost at time of sale.

NOTE: When physically placed in inventory, each used unit of an "Other Automotive" or "Non-Automotive" nature

(as outlined in the descriptions of Inventory Accounts 134 and 137) should be assigned a stock number (using a separate series of numbers) and should be recorded on a Used Vehicle Inventory Record. Subsequent sales data should be detailed for these units as it is in the case of automotive vehicles.

The duplicate copy should be removed and given to the Used Car or Truck Sales Manager. The original should be filed in the used car or truck inventory record file in the business office.

When each used unit is sold, pertinent information applicable to the sale, description of trade, computation of gross profit, and salesmen's commission should be recorded in the spaces provided.


FCA (2/18)


NEW AND USED VEHICLE INVENTORY AND SALES RECORD

As an optional method of controlling inventories, this form (original and duplicate copy) is provided to record pertinent details relative to new and used vehicles, and the gross profit resulting from the ultimate sale of such units.

Full particulars regarding each new and used vehicle received should be recorded in the proper sections of this form. The duplicate copy, a perforated 4 x 6 card, provides a stock record for the respective sales departments. The original copy provides a subsidiary record for use in the office to support the various vehicle inventory accounts, and also for use by dealership management to analyze vehicle sales and gross profits on such sales.

When each new vehicle is received, a stock number should be assigned, and the "New Vehicle" section of this form should be completed. Provision is made to record floor-plan financing as well as accessories installed by the dealership.

The duplicate card should be removed and given to the New Car or Truck Sales Manager. The original and unused sections of the duplicate copy should be filed in the new car or truck inventory section of the binder.

When each new vehicle is sold, pertinent information applicable to the sale should be recorded in the space provided. Accounting distribution should be verified by the amounts recorded in the "Cost" and "Sale" columns, and the gross profit should be recorded.

If a used vehicle is taken in trade on a new vehicle sale, the first "Used Vehicle" section of this form should be completed. To facilitate the use of this form, it is recommended that the stock number (assigned to the new vehicle sold) be assigned, with the suffix letter "A", to the used vehicle taken in trade (example: New Car – #100, used Car trade – #100A, etc.). Provision is made to record "Estimated Reconditioning" as well as actual reconditioning performed on used vehicles.

The duplicate card should be removed and given to the Used Car or Truck Sales Manager. The original and remaining unused section of the duplicate copy should be filed in the used car or truck inventory section of the binder.

When a used vehicle is taken in trade on the previously mentioned trade, the remaining "Used Vehicle" section should be completed. The stock number assigned should follow the aforementioned sequence (#100B would be the next number used).

Accounting distribution should also be verified by the amounts recorded in the "Cost" and "Sale" columns, and the gross profit should be recorded.

(2/18)


FCA 9-45

DUAS FORMS DUAS-325

ACCOUNTS PAYABLE VOUCHER ENVELOPE

All purchases, regardless of their nature, are entered on a voucher envelope. This formalized process of vouchering the invoices for payment eliminates the need for individual creditor accounts (subsidiary ledger). When used in its most comprehensive form, all expenditures are entered as a credit to accounts payable and distributed to the appropriate general ledger account on the voucher envelope. The voucher envelope initiates the flow of cost and expense data, facilitates their analysis, and provides the most effective control over purchases and their payment. In this system, a voucher envelope is prepared for each vendor, each month. By issuing only one voucher envelope per creditor per month, all invoices from one vendor are listed and placed in one voucher envelope each month. (Care should be exercised so that cash discounts will not be lost.) This procedure postpones the final recording in the Cash Disbursements and Purchase Journal until the end of the month, but it also reduces the volume of entries in the journal when there are numerous small purchases from the same supplier. Upon receipt of a vendor's invoice, it is approved in the appropriate departments for quantities, prices, receipt of merchandise, mathematical accuracy, terms and account distribution. A voucher envelope is prepared from the approved invoice. The amounts shown on the vendor's invoice are entered on the face of the envelope in column #2 as the account payable and a column (#3 thru #10) headed with the appropriate account number to be charged. This should be done daily as vendor invoices and credits are received for processing. After the voucher envelope is posted, the approved invoice and other supporting documents are inserted in the envelope. Unpaid voucher envelopes, together with all supporting documents, are filed by due dates in a file called a "tickler." This procedure emphasizes the time and amount of payments, and thereby facilitates the administration and control of cash, and the payment of bills within due dates. When the due date arrives, the voucher envelope is removed from the unpaid file, or "tickler," and is approved for payment. A check is drawn, and the check number and date of payment are entered on the voucher envelope. Next, the check number, date paid, account distribution, etc., are entered in the appropriate columns in the Cash Disbursements and Purchase Journal. Paid voucher envelopes are then filed alphabetically by vendor.

When an adjustment is required to amounts entered in the current month, or prior periods, the adjustment should be made by recording on the current voucher envelope. At month-end, columns are totaled on all unpaid voucher envelopes. They are then transferred to the account distribution section at the right-hand side where the account numbers with related amounts are entered in numerical order for recording in the Cash Disbursements and Purchase Journal as the accounts payable. This form can be used for recording transactions by hand, bookkeeping machine, or electronic accounting. The form has special columns captioned "KEY" and a block captioned "VENDOR NUMBER." These columns and blocks are to be used by those dealerships having electronic accounting.


FCA (2/18)

DUAS FORMS DUAS-331

PETTY CASH SUMMARY ENVELOPE

The purpose of this form is to provide for recording and filing all Petty Cash Vouchers, so that a detailed record may be kept of the petty cash fund expenditures and reimbursements.

This envelope is for filing Petty Cash Vouchers, with space provided on the front for a summary of these vouchers. Space is provided for listing the voucher numbers, date, total amounts, and account distribution. (The fund should be replenished as often as necessary, and always at the end of the month.) The summary should be properly approved.

A check should be issued for the exact expenditure as shown by this summary. This check will be entered in the Cash Disbursement and Purchase Journal, crediting the bank in the usual way and debiting the applicable accounts, as shown by the totals of the columns in the distribution section of the summary. This check should be cashed at the bank and the cash placed in the fund to restore it to its original amount.

(2/18)


FCA 9-47

DUAS FORMS DUAS-337

DAILY SUMMARY – REPAIR ORDER SALES AND COUNTER SALES

The purpose of this form is to provide for the daily recording of all entries resulting from the sale of parts, accessories, and service labor, rather than entering each individual transaction separately in each book of original entry (journals).

All entries on this form should be recorded from the Parts Counter Invoices and Repair Orders, excluding Internal Repair Orders and Warranty Repair Orders.

Items recorded in the "Accounts Receivable" column should be posted individually to the proper customer's ledger card in the subsidiary ledger on a daily basis.

The columns have been pre-headed with the basic account names and numbers generally required to record transactions applicable to the form. Additional blank columns are also provided for repetitive transactions (to one account), so as to reduce the summarization in the "General" column.

The left-hand page provides space in the upper-left corner for recording the number of completed customer repair orders and parts counter invoices. Use of this section will assist in preparation of the monthly financial statement.

The last two lines of each page have been separated to record column totals for double and single posting amounts. This separation will assist accountants in balancing and cross-footing the summary.

At the end of each day, the entries on this form should be summarized and posted to the Service and Parts Journal – Repair Order Sales (DUAS-161) and the Parts and Accessories Journal – Counter Sales (DUAS-165). Care should be exercised when posting to the journals to assure that both are in balance.


FCA (2/18)

DUAS FORMS DUAS-355

PREPAID AND ACCRUED ACCOUNTS SCHEDULE

This form provides for maintaining a complete record of all "Prepaid" and/or "Accrued" accounts, excluding Insurance.

Separate schedules (sheets) should be used for Prepaid and Accrued Items. However, more than one prepaid account, or accrued account, may appear on one schedule.

The date and detailed explanation of the transaction should be entered in the columns provided. The total amount prepaid, or to be accrued, should be entered in one of the blank columns provided. The period of time over which the pre-payment or accrual will take place should be entered as calendar dates in the "Period" column.

The amount to be distributed in this period should be recorded in the "Amount for Distribution" column. This amount is then divided by the number of months in the period to determine the monthly provision. The monthly portion is then entered in the appropriate "Monthly Distribution" columns. If the duration extends beyond the current year, the balance not distributed should be entered in the "Balance Forward" column.

The column for each current month should be totaled at the month-end. These totals are used for the recording in the Standard Entries Journal.

(2/18)


FCA 9-49

DUAS FORMS DUAS-367

FIXED ASSET INVENTORY AND DEPRECIATION RECORD

This form is provided as the subsidiary record for maintaining a complete record of individual fixed assets and their accumulated depreciation.

It is recommended that a separate listing be made for each classification of fixed assets, corresponding with the accounts in the general ledger.

This is a two page form providing a detailed account of accumulated depreciation for each of six years. At the end of the six year period, all items should be transferred to new sheets. At the top of the pages, spaces are provided for recording the classification of the fixed assets and physical inventory dates.

Spaces are provided for identification numbers of each asset, the date of last inventory, and the description of the fixed asset.

Moving from left to right, in the section captioned "Accumulated Reserve January 1st," columns are provided for recording the following:

Date acquired Age when acquired – in months Cost (original amount recorded in the fixed asset account) Estimated remaining life when acquired – in months Amount (of reserve recorded in the accumulated reserve account) Months depreciation since acquisition Remaining value to be depreciated

This section should be completed at the time each fixed asset is acquired. If the accounting period has been established on a fiscal year basis instead of a calendar year basis, "January 1st" in the column heading should be changed to the first day of the fiscal year.

Six sections, "YEAR 20 – ," are provided for a detailed record as follows:

Estimated remaining life in months Dollar amount of reserve per month Number of months of depreciation during year Total amount reserved during year Accumulated reserve December 31st (or ending date of fiscal year) Remaining value to be depreciated

Each month-end, the column for "$ Amount of Reserve Per Month" may be sub-totaled, and this amount used for the entry in the Standard Entries Journal.

The following procedures are recommended in the scheduling of fixed asset inventories and depreciation records: 1. VENDOR INVOICES COVERING PURCHASES OF FIXED ASSETS SHOULD BE RENDERED IN

DUPLICATE. a. FOR FIXED ASSET FILE. b. FOR ACCOUNTS PAYABLE FILE.

2. IN THE COLUMN "DESCRIPTION OF ASSET," RECORD THE COMPLETE DETAILED DESCRIPTION, INCLUDING SIZE, CAPACITY, MODEL AND/OR SERIAL NUMBERS, WHERE APPLICABLE.


FCA (2/18)

DUAS FORMS DUAS-367 DUAS-373

FIXED ASSET INVENTORY AND DEPRECIATION RECORD – Cont’d.

3. IMMEDIATELY FOLLOWING THE ASSET DESCRIPT, RECORD THE VENDOR'S NAME AND INVOICE NUMBER.

4. PURCHASES FROM EACH VENDOR SHOULD BE SET UP IN LIKE MANNER, SKIPPING A LINE BETWEEN EACH VENDOR.

5. SUBSEQUENT PURCHASES SHOULD BE RECORDED AS ABOVE – EACH TIME RECORDING THE VENDOR'S NAME AND INVOICE NUMBER.

This procedure will give visibility to assets purchased on each invoice.

The total in the "Cost Column" should agree with the respective fixed assets general ledger account each month-end.

The prior year's "Accumulated Reserve – Dec. 31st" plus the current year's depreciation ($ Amount of Reserve Per Month x elapsed months) should agree with the accumulated reserve general ledger account each month-end. It is recommended that a physical inventory of all fixed assets be taken at a convenient time during the third month of each calendar quarter.

MONTHLY ANALYSIS SUMMARY DUAS-373 This form is used for compilation of monthly analyses, trial balances, schedules, etc., of the various accounts, wherever a specific form is not provided.

Office personnel will find this form has many uses for assembling, refining, and developing required figures. It may also be used to compile any other supplemental "monthly analysis summary" requested by dealer management.

(2/18)


FCA 9-51

DUAS FORMS DUAS-379

BANK RECONCILIATION

The purpose of this form is to provide a monthly reconciliation of cash in the bank and to maintain proper balance in the general ledger account. The balance in this account should be reconciled with the balance shown on the bank's statement each month-end. The bank's balance, less all outstanding checks, should equal the balance in this account as shown in the general ledger.

If more than one bank account is maintained, a separate general ledger account should be carried for each bank account and a reconciliation should be performed for each account.

NOTE: The dealership should have a bank statement furnished at each month-end in order to provide a means of

reconciling the books.


FCA (2/18)

DUAS FORMS DUAS-453

USED VEHICLE APPRAISAL

This form is prepared by the person doing the appraising for the dealership. Its purpose is to give an accurate estimate of the net value of the used vehicle at the time of appraisal.

Space has been provided to show pertinent information related to the vehicle, owner, date of appraisal, vehicle the purchaser is interested in, and salesman's and appraiser's names. The list of "Items" to be checked on the vehicle has been arranged in alphabetical order for convenient use. This list of items is not intended as an all-inclusive check, but rather as a guide to be used for critical areas to be appraised. Space has been provided for any additions the appraiser may wish to insert.

This form is furnished in triplicate. The original copy should be attached to the customer's order if the deal is consummated; if the deal is not made, the original should be filed for follow up. One copy should be retained by the appraiser (sales department), and one copy is for the salesman's use.

(2/18)


FCA 9-53

GENERAL

The Dealer Financial Statement is the end result of all of the detailed transactions recorded in the Dealer Uniform Accounting System, and in the hands of management becomes an accurate tool to evaluate past performance and to aid in planning for the future. Management can be assured of maximum benefit only if the financial statement is prepared early in the month following the period it covers, and if it is prepared in as complete a form as possible to permit evaluation of the total dealership performance.

The Dealer Financial Statement is designed so that the financial information, as recorded in the general ledger, may be readily transcribed onto the statement form. The amount for each financial statement item is the balance in the general ledger account. The account number of each item is indicated after the account name. In some instances there are account numbers with a series of consecutive letter suffixes in the general ledger which must be combined for statement purposes. The amount to be inserted on the financial statement in those instances should be derived by adding the general ledger balances of the applicable consecutive accounts.

There is certain other information required on the financial statement that cannot be taken from the general ledger. The source of the data and/or the method of deriving the required information is indicated on the subsequent pages.

The financial statement has been constructed into six separate pages to facilitate preparation and interpretation (9 pages in Canada). These pages are four-copy carbon-interleaved forms, with an additional "Worksheet" copy for each page. A seventh page is provided as an option for those dealerships that wish to departmentalize their operating profit by profit centers.

DUAS NO.

DEALER FINANCIAL STATEMENT

CHY2287-1 Balance Sheet CHY2287-2 Statement of Income and Expense CHY2287-3 Departmental Gross Profit Analysis (New) CHY2287-4 Departmental Gross Profit Analysis (Used, F&I) CHY2287-5 Departmental Gross Profit Analysis (Service & Parts) CHY2287-6 Departmental Profit/Loss with Fixed Expense Allocation CHY2287-7 Operating Information Lease and Rental

CHY2287-1C Balance Sheet CHY2287-2C Statement of Income and Expense CHY2287-3C Departmental Gross Profit Analysis (New) CHY2287-4C Departmental Gross Profit Analysis (Used, F&I) CHY2287-5C Departmental Gross Profit Analysis (Service & Parts) CHY2287-6C Departmental Profit/Loss with Fixed Expense Allocation CHY2287-7C Departmental Gross Profit Analysis - FIAT Operations CHY2287-8C Statement of Income and Expense - FIAT Operations CHY2287-9C Gross Profit Analysis & Statement of Income and Expense - Branch Operations CHY2287-10C Operating Information Lease and Rental

Most dealerships will be concerned only with the first five pages of the financial statement. However, those dealerships that engage in vehicle lease and rental activities as a part of their dealership operation should also complete the seventh page (page 10C for Canadian dealerships), Operating Information – Leasing and Rental (DUAS-201-5C).

All pages of the financial statement have "key-punch" symbols located throughout the page. These symbols are used by the electronic processing department of FCA to develop the Dealer Performance Report, Dealer's Expense and Service and Parts Analysis. The information on your analyses is taken directly from your Dealer Financial Statement. The analytical and comparative value of these analyses cannot be over-emphasized. Therefore, it is extremely important that the financial statement be LEGIBLE, ACCURATE, and PROMPTLY COMPLETED.

Reproductions of each page of the financial statement together with a brief description and explanation are on the following pages.

(2/18)

DEALER UNIFORM ACCOUNTING SYSTEM FCA 10-1


BALANCE SHEET CHY-2287-1

This is Page 1 of the Dealer Financial Statement. It contains all the Assets on the left side, and all the liabilities and Net Worth on the right side. In addition to the fundamental classification by types of accounts, this page has been separated, by screening, into major divisions.

After transcribing general ledger account balances to the applicable line items on this page, it will be necessary to compute totals for the various classifications and divisions; these are self-explained on the form. However, attention is directed to the following areas:

PAST DUE RECEIVABLES – these amounts are obtained from the trial balance and aging reports prepared for the individual general ledger accounts, and should be in agreement with the figures reported in the Receivables Analysis section of Page 4 financial statement.

LIFO RESERVE – INVENTORY ADJ. – is provided for those dealerships using the LIFO Method of Inventory Valuation. This account is reported on the Liabilities side of the Balance Sheet below the Total Liabilities Line.

NEW VEHICLE INVENTORIES – are to be shown in total units and dollars, by car line handled, on this page. However, on Page 4, there is an inventory Analysis section which details the unit count by vehicle line.

PARTS AND ACCESSORIES – FCA – NO SALES ACTIVITY 12 MONTHS – represents the dollar amount of parts inventory without sales activity for the previous 12 months. Dealers with computerized parts inventory systems can determine the "no activity" parts dollar amount from inventory management reports provided by the computer vendor.

LAND, BLDGS., & EQUIPT. – COST BOX - represents the original cost ("A" accounts) before any reductions for depreciation or amortization ("B" accounts).

CREDIT BALANCE RECEIVABLES – all credit balances are monies due and payable; therefore, they are reported on the liability side of the balance sheet.

WORKING CAPITAL – should be computed for the "Actual-$" amount in accordance with the formula printed on the balance sheet. If the "Guide-$" amount is desired, it may be obtained from the zone office.

LONG TERM DEBT – AMOUNT DUE WITHIN 1 YEAR BOX – should reflect that portion of the Long Term Debt which is due within the ensuing twelve months from the financial statement date. This amount is used in the Working Capital computation.

CURRENT EARNINGS BEFORE TAXES – is the only section that does not have a general ledger account with a monthly balance. Each month the balance to be shown for this section should be in agreement with the amounts shown as "Net Earnings or (Loss)" for both month and year-to-date on Page 2, Line 79. NEW UNITS AND USED UNITS – in the case of new units, "Other" car and truck lines are reported separately from the "Chrysler" car and truck lines. Used units should reflect only the retail sales. Units reported here should be in agreement with those reported on Page 3 for both month and year-to-date. LEASE & RENTAL UNITS – should be separately recorded for their respective months, as they are put into service. In the case of leased units, include any retail leasing units sold with the leasing units owned.


FCA (2/18)

DEALER FINANCIAL STATEMENT FORM CHY-2287-1

BALANCE SHEET

(2/18)


FCA 10-3


STATEMENT OF INCOME AND EXPENSE CHY-2287-2

This is Page 2 of the Dealer Financial Statement. It highlights the "Profit Center" concept wherein the five major centers – New Vehicle, Used Vehicle, Service, Body and Paint, and Parts Departments – can be measured for profit contribution by each center, and as related to the total operation. Both month and year-to-date measurement has been provided.

To provide greater management control, provision has been made to show each classification of departmental expense as a percent of departmental gross profit. Fixed Expenses are related to the Total Gross Profit of the dealership.

The "Gross Profits" (Lines 1, 24 & 34) for each of the five "Profit Centers" are brought forward from Pages 3, 4 and 5. Pertinent expenses directly chargeable to each Profit Center have been positioned beneath the respective gross profits so that the "Departmental Net Profit" can be readily determined for each Profit Center (Lines 20, 33 & 44).

Those expenses not chargeable to the five Profit Centers are labeled Fixed Expenses and reported on Lines 46 thru 64. Salaries – Owners and Officers is entered below this section.

Operating Profit is determined as described on the form. The "Net" amount of Other Income and Other Deductions (obtained from Line 80) is then applied to arrive at the Net Earnings or (Loss) (Line 70). This Net Earnings or (Loss) is carried forward to Page 1 for completion of the financial statement.


FCA (2/18)


STATEMENT OF INCOME AND EXPENSE

(2/18)


FCA 10-5


DEPARTMENTAL GROSS PROFIT ANALYSIS AND MANAGEMENT OPERATING INFORMATION CHY-2287-3 This is Page 3 of the Dealer Financial Statement. It contains all of the Sales Accounts, Gross Profits, and Units for New Vehicles by month and year-to-date. The Gross Profits relating to the various sales classifications are computed directly on the general ledger sheets and transcribed to the appropriate line on this page together with the applicable Sales and Units amounts. Provision has been made to show the totals of "Profit Center," New Vehicle Department. The gross profit totals are carried forward to Page 2 for completion of that page. Screening has been used on this page to eliminate the areas that do not require the insertion of figures. It is important that all applicable amounts be entered in their proper space, particularly units sold in the New Vehicle Department. To facilitate comparisons for management purposes, space has been provided for computing the "Gross Profit Per Unit" (PNUR) in the New Vehicle Department.

The balance of this page consists of information used by management in evaluating other areas of the operation. Specific areas of information are: INVENTORY ANALYSIS - spaces are provided to report all inventory by vehicle line. The total of units reported in this section should agree with the total units reported on Page 1 for Total New Vehicle Inventory.


FCA (2/18)


DEPARTMENTAL GROSS PROFIT ANALYSIS – (NEW)

(2/18)


FCA 10-7


DEPARTMENTAL GROSS PROFIT ANALYSIS AND MANAGEMENT OPERATING INFORMATION CHY-2287-4 This is Page 4 of the Dealer Financial Statement. It contains all of the Sales Accounts, Gross Profits, and Units for New Vehicles by month and year-to-date. The Gross Profits relating to the various sales classifications are computed directly on the general ledger sheets and transcribed to the appropriate line on this page together with the applicable Sales and Units amounts. Provision has been made to show “Profit Center” totals in Used Vehicle Department. The gross profit totals are carried forward to Page 2 for completion of that page. Screening has been used on this page to eliminate the areas that do not require the insertion of figures. It is important that all applicable amounts be entered in their proper space, particularly units sold in the Used Vehicle Department. To facilitate comparisons for management purposes, space has been provided for computing the "Gross Profit Per Unit" (PUUR) in the Used Vehicle Department.

The balance of this page consists of information used by management in evaluating other areas of the operation. Specific areas of information are:

USED VEHICLE INVENTORY ANALYSIS – provides vital management information, in terms of units and dollars, concerning total inventory and age of inventory.

F & I Profit Center - provides break up of transactional summary in F & I department by sub sections for New and Used. It also lists individual Service Contract types and profit margins on each category. Operational Profit Analysis: - provides a quick summary Dealer’s Financial performance trends in all the departments.

10-7A DEALER UNIFORM ACCOUNTING SYSTEM

FCA (2/18)


DEPARTMENTAL GROSS PROFIT ANALYSIS – (USED)

(2/18)


FCA 10-7B


DEPARTMENTAL GROSS PROFIT ANALYSIS AND ANALYSIS OF OPERATIONS CHY-2287-5 This is Page 5 of the Dealer Financial Statement, and will represent the final page for some dealerships. It contains all of the Sales Accounts, Gross Profit, and Units for Service, Body and Paint, and Parts Department by month and year-to-date. Provision has been made to show the totals of each "Profit Center," Service, Body and Paint, and Parts Departments. The Gross Profit totals are carried forward to Page 2 for completion of that page. Screening has been used on this page to eliminate the areas that do not require the insertion of figures. It is important that all applicable amounts be entered in their proper space, particularly the number of repair orders (completed) by classification in the Service Department and the number of Parts Counter Tickets for Retail and Wholesale. To facilitate comparisons for management purposes, space has been provided for computing the "Gross Profit as a percent of Sales" in all department sections.

Whenever amounts are reported for Vehicle Lease and Rental Income and/or Expenses, Accounts 615 and 715, respectively, it is recommended that DUAS-201, Operating Information – Leasing and Rental, also be prepared. (See explanation of this form.) The balance of this page consists of information used by management in evaluating other areas of the operation. Specific areas of information are:

MOPAR EXPRESS LANE LABOR AND PARTS – This section should only be used by Dealers who are certified Mopar Express Lane Dealers. All sales for Labor and Parts in the Express Lane should be recorded in these accounts. PERSONNEL SUMMARY – spaces are provided to report all personnel by department and classification. Personnel should not be "split" between departments/classifications, but should be reported in the area primarily worked. Adequate manpower, properly placed, should be available to accomplish the established objectives. LABOR RATES AND EFFICIENCY - This section has been added to the financial statement to help you determine the efficiency of your service department. It is possible that most of these accounts will have to be filled in manually before sending your financial statement to FCA. You should be able to retrieve a report from your DMS system that will provide you with your Effective (actual) Labor Rates by dividing the actual sales by hours billed. You should also be able to retrieve the Service Labor Hours Billed from your system and the Total Technician Hours Available from your payroll (actual hours worked by your technicians). Dividing the Hours Billed by the Hours Available will give you the Service Labor Efficiency for your Technicians.


FCA (2/18)


DEPARTMENTAL GROSS PROFIT ANALYSIS – (SERVICE & PARTS)

(2/18)


FCA 10-9

DEALER FINANCIAL STATEMENT FORM

DEPARTMENTAL PROFIT/LOSS WITH FIXED EXPENSE ALLOCATION CHY-2287-6

This form is Page 6 of the Dealer Financial Statement. This form provides the reporting of the fixed expenses allocated to the five major centers (New Vehicle, Used Vehicle, Service Mechanical, Service Body and Paint, and Parts Departments) with the resultant departmental operating profit/loss for each. The fixed expenses for the Administrative Department are also to be distributed to the operating departments. Both month and year-to date measurement has been provided.

Departmental Sales and Gross Profit for New Vehicle and Used Vehicle centers are carried over from Page 3 and 4. Departmental Sales and Gross Profit for the Mechanical, Parts, Body and Paint centers are carried over from Page 5. Variable and Semi-Fixed Expenses are carried over from Page 2.

Screening has been used on this page to eliminate the areas that do not require the insertion of figures.

By utilizing the sales, cost of sales, and selling/direct expense accounts provided in the Chart of Accounts, the Department Net for each of the five profit centers (New, Used, Service Mechanical, Service Body and Paint, and Parts) is readily determined.

The Departmentalization section of this manual contains numerous methods for fixed expense allocation.

RECEIVABLES ANALYSIS – provides aging information for the significant receivable accounts, indicating the current and past due amounts. In addition, space has been provided to indicate the allowance for doubtful accounts for each class of receivables. The totals in this area should be in agreement with the totals reported on Page 1 of the Financial Statement. For reporting Warranty Suspense (Memo), refer to Manual Section 9, Forms, for Warranty Sales Journal explanation.


FCA (2/18)


DEPARTMENTAL PROFIT/LOSS WITH FIXED EXPENSE ALLOCATION

(2/18)


FCA 10-11

DEALER FINANCIAL STATEMENT FORM

OPERATING INCOME – LEASE AND RENTAL CHY-2287-7

This form is Page 7 of the Dealer Financial Statement. It is intended for use only by those dealerships that engage in leasing and renting vehicles as a part of their regular operations, and not as a separate company or corporation. This page is essential for completeness of the financial statement for all such dealerships.

In addition to detailing the Vehicle Lease and Rental Income and Expenses (reported in Accounts 615 and 715 respectively), it also provides vehicle and capital analyses specifically for the leasing activities. As indicated on this form, the Total Income should be in agreement with that amount reported in Account 615; and the Total Expenses should be in agreement with that amount reported in Account 715. Additional comments and explanations are annotated at the bottom of the form.

Please note: This is page 10 of the Canadian Financial Statements.


FCA (2/18)


OPERATING INCOME – LEASE AND RENTAL

(2/18)


FCA 10-13

DAILY OPERATING CONTROL

GENERAL

To install and maintain the Daily Operating Control (DOC), the dealership must have:

A monthly forecast meeting with all department heads where sales and profit objectives are established;

A systematic flow of paperwork which will result in all transactions being recorded DAILY in the journals so that actual performance may be compared with forecasted objectives;

A sincere desire to take the necessary action required to attain, or exceed, the forecasted daily and weekly objectives.

The Daily Operating Control is not new to FCA Dealers. It has been in use in various forms for many years. The basic DOC procedures remain the same, that is: (1) prepare a forecast to establish sales and profit objectives; (2) compare actual operations with forecasted objectives on a daily and weekly basis; and (3) take the necessary action to correct any deficiencies.

(2/18)


FCA 11-1


DEALERSHIP OPERATIONAL FORECAST


FCA (2/18)


DEALERSHIP OPERATIONAL FORECAST

The form is a four-page fold-over, 8-1/2 x 11 inches. It is designed to forecast sales and profit objectives for the DOC. Throughout the form there are twenty-three numbered blocks. These are the forecast figures, or control points, which are transcribed to the DOC for comparison with actual operations.

It is recommended that prior to the monthly forecast meeting, a blank copy of this form be given to each department manager so that they may prepare their best estimate of their departments' sales and profit potential together with their anticipated expense requirements.

COVER

Enter the dealership name, location, month, year, and number of workdays in the forecast month on the lines provided.

PAGE 1

Sufficient space is provided for developing the forecasts for the New and Used Vehicle Departments; however, they are to be prepared independent of and apart from each other. Individual consideration should be given to sales by vehicle lines as well as all other elements (F&I, service contracts, etc.) in the gross profit area. The departmental total in units and gross may then be determined merely by adding the individual items. The total units should include only those vehicles or items which will be controlled on the DOC. After the total units and gross are developed, selling expenses should be forecasted and subtracted from the gross profit to arrive at the departmental net. After the New Vehicle Department forecast is completed, the same basic steps are followed to complete the Used Vehicle Department forecast.

PAGE 2

Developing the forecast for the Mechanical, Body, and Parts Departments will be completed on this page. The format provides three separate sections (one for each department). Taking each department individually, the total gross profit is determined by first developing the individual elements within each department. Then the direct expenses are forecasted and subtracted to arrive at the departmental net. Following the format of this page, the other two departments would be completed in the same manner.

PAGE 3

The Fixed Expenses, Other Income, and Other Deductions objectives are forecasted on this page. The forecasted objectives for each of these areas should be developed individually by considering the various elements within each.

The remainder of the Dealership Operational FORECAST is completed by following the instructions on the form to arrive at the Net Earnings.

(2/18)


FCA 11-3




FCA (2/18)



This form is 17 x 11 inches. It is folded to fit any standard-size three-ring binder. It is designed to accumulate the dealership's actual operating results, by Profit Center, on a daily basis; and it provides for the comparison of actual operations with forecasted objectives on a daily and weekly basis. This form should be used in conjunction with the Dealership Operational FORECAST on which the forecast for the month is prepared. The basic format of this form provides twenty-three "control points" at which the forecasted objectives may be compared with the actual operating performance of the dealership. The form should be used in the following manner.

FORECAST Transcribe all forecasted monthly objectives for each control point directly from the Dealership Operational FORECAST onto the Monthly Line of this form. Compute the daily objectives for each item and enter this amount on the Daily Line.

ACTUAL vs. FORECAST Enter the Date of the month and the Workday Number in the first two columns. A separate line should be used for each calendar date and its respective workday number. There are sufficient lines to record, each working day, the dealership's actual total daily operations. Each line is preprinted with the first letter of the day name (M-Monday, T- Tuesday, etc.). These should correspond with their respective calendar dates.

After that is completed, the weekly objectives should be computed and entered on each of the Weekly OBJECT Lines, for each of the twenty-three control points. These weekly objective amounts should be based on the number of workdays in the week and should be accumulated to represent the month-to-date forecasted objective. Although visual comparison is furnished on a weekly basis on the form, dealers should review the DOC and make comparisons daily.

The next step in maintaining this DOC form is the daily recording of the dealership's actual operating results. This information is readily obtainable from the accounting records. It should be accumulated in accordance with the instructions for D.O.C. Daily Worksheet.

At month-end, the financial statement figures should be compared with the Monthly Forecast figures and the variations recorded on the "Plus/Minus" Line at the bottom of the form.

(2/18)


FCA 11-5


D.O.C. DAILY WORKSHEET


FCA (2/18)


D.O.C. DAILY WORKSHEET

This form is intended for use by the accountant for compiling all the actual operations needed for daily entries on the Daily Operating Control. It provides for accumulating the actual amounts from the journals in an orderly and concise manner. A new form should be used each day.

The form is 17 x 11 inches and printed on both sides. It is folded to fit any standard-size three-ring binder.

FRONT SIDE

Column headings across the top and bottom of the form are arranged in the same order as they appear on the DOC for ease in transferring totals for all twenty-three control points.

The items listed down the left side are self-explanatory and indicate the sources from which the information needed in the squares is obtained. Figures on each line (squares) should be totaled down (and combined where indicated) and then transcribed on to the Daily Operating Control form.

BACK SIDE

The reverse side of this form provides for entering the accumulated actual expense amounts by individual account (number), as each journal is completed.

Some expenses are payable only once, twice, or a few times during the month: other expenses may be prepaid or accrued with the entry to the expense account made at month-end. Therefore, provision has been made for prorating the daily amounts of such items. Four columns (immediately to the left of account name column) are provided to record the prorated monthly budget, the daily proration of infrequent expenses, and the prorated amount to date. The expense accounts that are not normally prorated have asterisks next to the account numbers.

After all journals are completed and their total expenses, as well as the prorated totals, have been entered in the appropriate columns on this form, the totals for all lines are placed in the extreme right-hand column. Each expense account group is then totalled and transferred to the front side of the form as indicated.

(2/18)


FCA 11-7

OFFICE ROUTINES

GENERAL OFFICE PROCEDURES

The ease with which information can be secured from the files is an indication of an efficiently managed office. To attain that efficiency, the following sets of files would be helpful:

CUSTOMERS' FILES 1. A separate folder, alphabetically arranged, should be permanently maintained for each customer who

purchased a new or used vehicle, containing all vehicle transactions or correspondence with the customer (Car Deal File). (See New Vehicle–Receiving, Page 12-2.)

2. Repair Order hard copies should be filed alphabetically in folders under the customers' name in the Service Department.

3. Separate files for Inactive Accounts Receivable and Notes Receivable Ledger sheets should be maintained in close proximity to the bookkeeper (posting clerk) so that they may be readily available for credit reference, or reactivation if and when new charges occur.

4. The Application for Credit Card File should be kept close to the Office Manager's desk as the cards are in constant use in tracing new addresses through references when customers move leaving no forwarding addresses, etc., and filing new credit applications, whether accepted or rejected, for future reference.

VENDOR'S FILE Individual folders (or Accounts Payable Voucher Envelopes) should be maintained for filing invoices received from vendors from whom frequent purchases are made, such as FCA and other vendors having a large volume of business.

A folder (or voucher envelope) should be maintained as a general file for each letter of the alphabet, in which should be filed invoices received from those vendors from whom purchases are not frequently made.

Invoices, as received, should be entered on the face of the Accounts Payable Voucher Envelope and filed therein. The envelopes in turn should be kept in a separate "unpaid voucher file." When the voucher envelope is paid, the date of payment and the check number should be indicated: A. On the voucher envelope. B. And in the space provided on the disbursements journal, opposite the entry of the Accounts Payable Voucher

Envelope itself. C. Then the voucher envelope is filed in the "paid voucher file."

CORRESPONDENCE FILE A general correspondence file should be maintained which should include a separate folder for each letter of the alphabet and separate folders for people or organizations with whom frequent correspondence is carried on.

(2/18)


FCA 12-1

OFFICE ROUTINES

GENERAL OFFICE PROCEDURES – Cont’d.

SPECIAL FILES Separate folders, filed alphabetically, should be maintained for special subjects and reports. A few suggested folders are as follows:

Bond Claims Bond Forms Car Division Vehicle Sales Reports Daily Operating Control Records Finance company monthly statements of reserves Insurance – Monthly Report of Group Insurance Insurance – Public Liability and Property Damage Insurance Reports Insurance – Report of Collision, Fire, and Theft Losses Insurance – Report of Injuries Insurance – Workmen's Compensation Insurance Reports Taxes – A separate folder for each type of tax report

NEW VEHICLE – RECEIVING The responsibility for receiving new vehicles, logging-in and inspecting them to assure that the "extras" such as the spare tire, wheel covers, jacks, etc. are not missing, and for transit damage, should be assigned to one responsible individual.

As the new vehicles are received into stock, they should be assigned stock numbers, have identification stickers applied, and have identification key tags prepared. The consignee copy of the transportation bill should be promptly forwarded to the office with the assigned stock numbers alongside the serial numbers. The serial numbers on the freight bill should be checked against the serial numbers on the vehicles for possible errors.

The owner's manual, warranty book, all other papers, and duplicate keys should be removed from the vehicle and forwarded to the office. These documents should be properly identified by the inventory stock number.

A separate folder, arranged by stock number, should be prepared and maintained for each new vehicle received. The owner's manual, warranty, duplicate keys, and any other pertinent data should be retained in these folders until the vehicle is sold. When the unit is serviced for delivery, a copy of the Road Ready repair order should be placed in the folder.

When the vehicle is sold, the customer's full name, complete address, and the delivery date should be recorded on the folder, in the space provided. The contents of the folder are appropriately distributed and replaced with all the pertinent documents of the sales transaction, thereby converting the folder into the Customer's Car Deal Folder (see Customers' Files, Page 12-1).


FCA (2/18)

OFFICE ROUTINES

GENERAL OFFICE PROCEDURES – Cont’d.

USED VEHICLE TITLES A separate box of convenient size should be maintained for filing titles, registration certificates, or other documents (required by state law) evidencing ownership of used vehicles on hand. The used vehicle stock number should be written in pencil on the respective title and the title should be filed according to this stock number. These documents should be kept in the safe except when actually in use.

EMPLOYEE EARNINGS RECORD The complete preparation and current maintenance of this record will be of considerable value in connection with Social Security Reports, Income Tax Reports, request for references, etc.

RECORDS OF ORIGINAL ENTRY All Repair Orders, Parts Counter Invoices, Vehicle Invoices, Cash Receipts, and Check Vouchers should be serially numbered when the forms are printed, and all numbers should be accounted for and filed in numerical sequence. However, cancelled checks returned by the bank should be filed in numerical sequence by the months in which paid by the bank. Hard copies of Repair Orders should be filed alphabetically in folders under the customer's name in the Service Department.

MISSING OR VOIDED RECORDS Voided Repair Orders, Parts Counter Invoices, Vehicle Invoices, and Cash Receipts, etc., should indicate the cause of cancellation, be signed by the person voiding the form, and be approved by the dealer.

All copies of voided Repair Orders and Sales Invoices should be filed numerically in the respective binders. Customer copies of voided Cash Receipts should not be removed from the Cash Receipt Book. Voided Check Vouchers should be filed in the numerical sequence binder and the check with the cancelled checks returned by the bank.

The clerk who is delegated to account for the various original records should report, to the Office Manager, any irregularities such as missing numbers, missing copies of voided forms, or missing approvals of voided forms.

(2/18)


FCA 12-3

OFFICE ROUTINES

CREDIT AND COLLECTION OF ACCOUNTS RECEIVABLE

Granting credit stimulates buying and is an essential part of present day business practices. The risk involved in granting credit can be minimized. This can be accomplished by using the four basic fundamentals necessary to establish a sound system for extending credit. The fundamental requirements are as follows:

1. DELEGATING DEFINITE RESPONSIBILITY 2. SELECTIVE CREDIT EXTENSION 3. ESTABLISHING TERMS AND LIMITS 4. PROVIDING ADEQUATE INTERNAL CONTROLS

The fundamentals outlined above, if incorporated in a sound system, can accomplish:

1. A more liquid cash position 2. A better clientele, thereby increasing profits 3. A less expensive collection burden 4. A minimum of losses due to bad debts 5. A better reputation for the dealership 6. A minimum of complaints

Each is as vital to a sound system as the other. To incorporate any three without the fourth will leave a lot to be desired.

In spite of all safeguards that may be established in the granting of credit, there are occasional cases where the customer, for one reason or another, will fail to pay his obligation when it becomes due.

Therefore, it is essential that a systematic method of collecting past due accounts be devised. The Dealer Uniform Accounting System provides a starting point by making the Trial Balance and Analysis of Receivables with Collection Follow-Up, Form DUAS-349, available. Proper use of this form will provide a complete overview of the customers' accounts and the collection action taken.

A close follow-up effort should be maintained until the account is paid or turned over to an outside source for collection.

It has been found by most dealers that after their own efforts have been exhausted, better results are obtained by having a working arrangement with a local attorney rather than a collection agency.


FCA (2/18)

OFFICE ROUTINES

OFFICE MANAGER

Job Description:

The Office Manager is responsible for the supervision of the office staff, internal controls, and operational reporting.

Duties and Responsibilities:

1. Supervise the daily flow of accounting data from the operational departments into the computer

system. 2. Report the status of cash balances and cash requirements to the controller, dealer, or CFO. 3. Schedule the office staff in a manner to provide the best coverage of cashiering and phones for

t h e operational departments.

4. Provide a daily report of operational profit (MIS or DOC) and monthly reports of financial condition (financial statement, GL, schedules).

5. Oversee the computer system and provide ongoing training for the office staff. 6. Report to the controller, dealer, or CFO any variances in gross profit or expenses that are out of

guidelines. 7. Reconcile bank accounts and all balance sheets accounts requested by management. 8. Supervise and approve the purchasing of office supplies, forms, and other supplies required by the

office and operating departments at the lowest cost.

(2/18)


FCA 12-5

OFFICE ROUTINES

BOOKKEEPER

Job Description: Accurately record all business transactions in permanent records, in a manner so that the historical facts of the business can be compiled in the form of a financial statement each month.


1. Complete deposit slips and record amount of deposit. 2. Write checks; as authorized, and maintain a daily bank balance. 3. Enter all original documents in the various journals. 4. Keep an accounting of all pre-numbered documents (Use Check Sheet). 5. Maintain all subsidiary records and reconcile them at month-end with the general ledger control accounts. 6. Total, balance, and summarize journals at month-end. 7. Post all journals to the general ledger at month-end. 8. Compute balances in each general ledger account. 9. Compile information from journals onto the "Accountants Daily Worksheet" (for Office Manager's use in

posting to the daily operating control). 10. Make approved petty cash payments. 11. Perform any other duties that may be assigned.


FCA (2/18)

OFFICE ROUTINES

BILLING CLERK

Job Description: Properly execute the paper work on new and used vehicle sales, titles, and transfers.


1. Prepare invoices; finance papers, title applications, service policies, and other pertinent papers and data prior to delivery of a new or used unit.

2. Check sales orders, purchase statements, certificates of title, contract payments, lien payoffs, etc. 3. Maintain file of titles and manufacturer's certificates of origin. 4. Maintain a daily current inventory of used cars. 5. Maintain a "Police Book" daily if required. 6. Perform any other duties that may be assigned.

(2/18)


FCA 12-7

OFFICE ROUTINES

CASHIER

Job Description: Handle all monies received (from the sale of service, parts, and accessories, in addition to new and used vehicles, etc.).


1. Receive Repair Orders and Parts Counter Invoices, when completed, from the Parts Department. a. Place in file until car is claimed by customer. b. Receive payment, or accept charge (if customer's name is on approval credit list).

2. Maintain a current file of approved charge customers and credit limits. 3. Reconcile cash with total cash receipts. 4. Upon direction from the Office Manager, prepare receipts for all monies received in the mail. 5. Perform any other duties that may be assigned.


FCA (2/18)

JOB DESCRIPTION

Position: Chief Financial Officer

Position reports to:

Dealer or CEO

General Description:

(2/18)


FCA 12-9

CLOSING ROUTINES

DAILY ROUTINE

The establishment of efficient operating routines is imperative in any business. A routine should be established so that the operations of one day are completely posted and proved on the following day. These routines are provided as guides and contain the minimum requirements to assure up-to-date and accurate recording of the dealership's business.

The following is a suggested daily office procedure. It provides for the complete recording of transactions daily and will facilitate the compilation of the financial statement at month-end.

1. Sort all source documents (repair orders, parts counter invoices, etc.) from the previous day into

numerical order. After the numbered documents are posted in the journal, the recorded numbers should be checked off on numerical Check Sheets for accountability. Verification to the journals rather than the source document provides proof of posting as well as numbered accountability. Any missing numbers should be promptly traced and their disposition determined.

2. When using the Daily Summary – Repair Order Sales & Counter Sales (DUAS-377), it should be cross-footed and balanced before transferring figures to the related journals.

3. All cash receipts and disbursements should be posted promptly to their respective journals. 4. Deposit cash receipts in the bank. It is imperative that all monies be deposited intact each day. 5. All new and used vehicle sales invoices should be recorded in their respective journals. 6. All customer documents should be completed so as to facilitate prompt settlement with the customer. 7. All notes payable and vehicle lien payoffs due the financing institution should be paid the same day the

vehicle is sold, or received. 8. Post to all subsidiary ledgers from the entries in the journals. 9. All source documents should be filed.

Upon completion of daily transactions, as described above, the accumulated monthly totals should be penciled in and all journals cross-footed to prove the accuracy of the postings.

In addition, other periodic routines such as weekly or monthly payrolls, collection follow-up, etc., should be planned in advance so that the regular daily routine is not disrupted or is disrupted as little as possible.

All departments in the dealership are vitally involved in these routines and failure of any department to adhere to their requirements can contribute to the inefficiency and breakdown of the entire system.

(2/18)


FCA 13-1

CLOSING ROUTINES

MONTHLY JOURNAL CLOSINGS

The following is a recommended work procedure to be followed in properly closing the journals monthly and preparing the financial statement.

All business transactions through the last day of the month should be recorded before closing the journals. Any open Petty Cash Vouchers should be cleared and the fund reimbursed at the month-end.

Physical inventories should be taken, as of the close of business, on the last day of the month, of the following assets which will serve as supporting schedules for these accounts:

1. New Cars 2. New Trucks 3. Demonstrators 4. Used Cars 5. Used Trucks 6. Tires and Tubes 7. Other Automotive Inventories 8. Body and Paint Materials 9. Gas, Oil, and Lubricants 10. Work in Process – Labor 11. Sublet Work 12. Non-Automotive Inventories

These physical inventories should be compared with the General Ledger totals and any necessary adjustments should be made in the Standard Entries Journal.

All open purchase orders should be recorded in the Cash Disbursements and Purchase Journal as accrued accounts payable items, thus avoiding any delay in closing this journal. These would consist only of those items representing materials and/or services received, for which invoices have not been received as of the month-end. (These accrued accounts payable items should be reversed at the beginning of the following month.) Also record any unpaid Voucher Envelopes as additional month-end accrued accounts payable.

Compute and record the accrued payroll. The accrued payroll is the amount earned by the employees (but not paid) from the close of the last pay period through the last day of the month.

All journals should be closed, balanced, and summaries completed for all the "General" and "Expense" columns. The journal balances should then be posted to the General Ledger. A preliminary balance should be determined for each General Ledger account so that adjusting entries can be prepared.

Cash Sales–Account 117, in the General Ledger, should be checked to determine that the debits equal the credits. This account should not have a balance. Considerable time in balancing at the month-end can be saved if this account is reconciled on a daily basis by the check-off columns provided in each journal.

Using the Trial Balance and Analysis of Receivables, Form DUAS-349, analyze all accounts and notes receivable to determine amounts past due in order to make the required adjustment to the Allowance for Doubtful Accounts. This adjustment should be recorded in the Standard Entries Journal and posted to the General Ledger.


FCA (2/18)

CLOSING ROUTINES

MONTHLY JOURNAL CLOSINGS – Cont’d.

The following receivable accounts should be proved with their respective subsidiary records and month-end supporting schedules, Form DUAS-349:

Service and Parts Accounts Receivable A/C 110 Vehicle Accounts Receivable A/C 111 Customer Notes Receivable A/C 112 Other Receivables A/C 114 Officers' and Employees' Accounts A/C 151

Additional schedules should be prepared and maintained to substantiate the remaining asset and liability accounts. The Office Manager should assure himself that all General Ledger account balances are correct, and that subsidiary ledgers and supporting schedules are in agreement with and support the General Ledger. The Dealer Uniform Accounting System provides several dual-purpose schedules, wherein two or more account balances may be detailed on one form, which will facilitate monthly reconciliation's.

Record the following in the Standard Entries Journal:

1. Prepaid Expense write-offs, such as insurance, taxes, rent, etc. 2. Depreciation Expense for the month on Buildings, Equipment, Company Cars, etc. 3. Amortization Expense of any Leaseholds. 4. Any accruals of insurance or interest expense, etc. 5. Accrual of taxes, such as property, payroll, etc.

Valuable time can be saved at the month-end if some of the adjustments are made during the month. Adjusting entries to many of the depreciation and prepaid accounts can be made prior to the end of the month. Entries of a recurring nature should be set up in the Standard Entries Journal rather than in the General Journal to avoid needless repetition of writing General Journal entries and explanations month-after-month.

The various bank accounts should be reconciled when the bank statements are received. Any adjustments for bank charges, etc., should be recorded and posted to the General Ledger.

All account balances in the General Ledger should be computed and extended. A trial balance to prove the ledger accounts may be taken by adding the debit balances and deducting the credit balances, or the Dealer Financial Statement Worksheet may be prepared and used as the trial balance in lieu of an adding machine tape of ledger sheets.

Any bonuses based on operating profit should be entered in the Standard Entries Journal and posted to appropriate ledger accounts.

Net Earnings may now be calculated and the amount of Estimated Income Taxes should then be computed.

The Income Tax Accrual should then be entered in the Standard Entries Journal and posted to the General Ledger.

(2/18)


FCA 13-3

CLOSING ROUTINES

MONTHLY JOURNAL CLOSINGS – Cont’d.

The financial statement should then be prepared.

Many accountants find it desirable to maintain a running analysis of the following accounts to assist their auditors in preparing the Federal Income Tax Returns:

Shop Supplies and Small Tools Advertising – New and Used Advertising – Service and Parts Advertising – General and Institutional Travel and Entertainment Dues, Subscriptions, and Contributions Bad Debts Amortization and Depreciation Accounts Interest Earned Miscellaneous Expense Disposal of Capital Assets Other Income Accounts Interest Paid Bonuses Other Deductions Accounts

In addition to being an aid in preparing final Income Tax Returns, such analyses are useful in locating errors in account classification. If such analyses are required by the tax accountant, it is desirable to maintain them on a monthly basis to avoid a heavy workload at the year-end.

The process of preparing a complete, accurate, and timely financial statement is not difficult if the Accountant or Office Manager has the ability to plan a work schedule so that all his activities are carried out in an organized and methodical manner. The recording of documents and transactions should be kept up-to-date daily.


FCA (2/18)

CLOSING ROUTINES

YEAR-END CLOSING

In addition to the procedures outlined in the "Monthly Journal Closing" section, a physical inventory should be taken at least once a year of the Parts and Accessories Inventory, and any other inventory which the dealership may carry for resale. In any event, a physical inventory of such items at the end of the accounting year is recommended so that any adjustments may be made prior to the final statement of the year's operations. Since many dealerships employ outside auditors to review their books after the close of the year, and adjustments are usually required, it is suggested that the financial statement be prepared at the end of the accounting year the same as for any other month in the year. Then, after final adjustments have been made, a revised financial statement should be prepared and marked "Final Statement After Adjustments." "Working papers" substantiating Balance Sheet Account balances should be prepared and filed for future reference.

After the final financial statement and its supporting schedules have been prepared, the following operating accounts in the General Ledger should be closed to Account 299, Profit or (Loss) – Current, by a General Journal entry:

Expense Accounts 300 thru 399 Sales Accounts & Cost of Sales Accounts 400 thru 599 Other Income Accounts 600 thru 699 Other Deduction Accounts 700 thru 799 *Leasing Income 800-8 thru 899-8 *Leasing Expense 900-8 thru 999-8

*These sub-accounts should be closed into their respective control account, Vehicle Lease and Rental Income, Account 615 (for the 800 Account Series); and Vehicle Lease and Rental Expense, Account 715 (for the 900 Account Series). This journal entry should be made prior to the below entry.

The entry explained as "To close all operating accounts to Profit or (Loss) – Current Account" would be as follows:

Debit Credit Sales Accounts (To clear Credit Balances) XXX Other Income Accounts (To clear Credit Balances) XXX Cost of Sales Accounts (To clear Debit Balances) XXX Expenses (To clear Debit Balances) XXX Other Deductions (To clear Debit Balances) XXX Profit or (Loss) – Current XXX XXX (Loss) (Profit)

In actual practice, the above entry would list each account name, number, and balance. The amount of the profit or loss is obtained by subtracting the Total Debits from the Total Credits. If the excess (difference) is a debit amount, then it would indicate a need for a credit entry to the Profit or (Loss) Account, which would represent a profit (credit balance in the account). Conversely, if the excess (difference) is a credit amount, then it would indicate a need for a debit entry to the Profit or (Loss) Account, which would represent a loss (debit balance in the account). The above General Journal entry, when posted, would leave zero balances in all of the operating accounts.

(2/18)


FCA 13-5

CLOSING ROUTINES

YEAR-END CLOSINGS – Cont’d.

Estimated Income Tax – Current Year: Account 296 should be transferred to Profit or Loss – Current, Account 299, whether the dealership is a corporation, partnership, or proprietorship.

The Profit or (Loss), Account 299, should be closed by transferring the balance to:

A/C 275 Retained Earnings: if operated as a corporation A/C 280 Investments – Proprietor: if operated as a sole proprietorship A/C 280 Investments – Partners: to each partner's account, if operated as a partnership.

Dividends: Account 277 should be closed by crediting it with the amount of the debit balance in the account and debiting Retained Earnings (Surplus), Account 275.

Adjustments: Account 290 should be closed to Retained Earnings (Surplus), Account 275, if a corporation; or to Investments Account 280, if a partnership or proprietorship.

Withdrawals: Account 285 should be closed to Investments – Partnership or Proprietorship, Account 280.

Upon completion of the above entries, the General Ledger should only have balances in the Asset, Liability, and Net Worth accounts. At this point, new General Ledger sheets should be prepared for the new year and the year- end balances in the Asset, Liability, and Net Worth accounts should be carried forward as opening balances on the new General Ledger sheets.


FCA (2/18)

DEPARTMENTALIZATION

The Profit Center Concept is a management control system whereby profit contributions may be measured for each profit center, or department, within the total operation. Departmentalization is the further extension of profit centering down to a Departmental Operating Profit. It involves the distribution of all fixed expenses to the various profit centers. Its purpose is to maximize profits through close control of the individual activities comprising the total operation. Departmentalizing is the most effective when the dealer delegates responsibilities for sales volume expense control and operating results to the individual department managers for their respective departments.

The Dealer Financial Statement, forms CHY2287-1 through 4, provides the reporting of a Departmental Net (gross profits less selling/direct expenses) for the five basic profit centers, i.e., New Vehicle, Used Vehicle, Service Mechanical, Service Body, and Parts Departments.

For a fully departmentalized profit center control, one additional form is provided:

Departmental Profit/Loss with Fixed Expense Allocation, CHY2287-5

This form provides the reporting of the fixed expenses allocated to the five basic profit centers with the resultant departmental operating profit/loss for each. The fixed expenses for the Administrative Department are also to be distributed to the operating departments.

By utilizing the sales, cost of sales, and selling/direct expense accounts provided in the Chart of Accounts, the Department Net for each of the five profit centers (New, Used, Service Mechanical, Service Body, and Parts) is readily determined.

For dealerships to further departmentalize their profit centers to an Operating Profit, the following considerations must be implemented into the work routines when dealing with charges and credits to all fixed expenses:

1. All Fixed Expense Accounts should have sub-accounts assigned for each department.

2. A Fixed Expense Sub-Ledger should be established for all twenty-eight fixed Expenses, Accounts 362

through 396.(Example:362-A, 362-B, 362-D, 362-E, 362-F)

3. All Source Documents distributed to fixed expenses must have an additional allocation by departments.

4. Daily posting of fixed expenses in the journals must include the additional posting to a Fixed Expense Sub-Ledger. The month-end close of journals into the general ledger should include the additional close and posting of this Fixed Expense Sub-Ledger to the general ledger, expense section.

5. Reporting the Operating Profit by profit center will require the preparation of the Departmental Profit/Loss

with Fixed Expense Allocation, form CHY2287-5, in addition to the regular four-page financial statement.

The DUAS account number structure is basically three-numeric-digits with a letter suffix for sub-accounts. In line with that concept, the Fixed Expense Accounts (362 through 396) can each be assigned a letter suffix to designate the individual profit centers as follows:

Operating Departments: Letters – Suffix New Vehicle A Used Vehicle B Service Mechanical D Service Body E Parts F

(2/18)


FCA 14-1

DEPARTMENTALIZATION

In so doing, the expense account number classifies the expense and the letters identify the department to which the expense is to be distributed.

Distribution of Fixed Expenses by Department should be done at the time entries are recorded in the journals. These entries are made easier if allocation by departments to be charged is indicated in the original source document. This will facilitate postings to the journals, the Fixed Expense and the General Ledger with subsequent preparation of form CHY2287-5.

Whenever possible, the item should be charged to the department incurring or benefiting from the expense.

When an item cannot be identified specifically with one department, it should be apportioned over the responsible departments on an equitable basis.

In order to more accurately determine the results of each profit center, a sound basis for charging expenses to the responsible departments should be developed.

Allocation of Fixed Expense Item Alternative (AFEIA)

It is recommended that one of the following allocation methods be used when distributing fixed expenses to the various departments. If a fixed expense can be attributed directly to a specific department (i.e. a separate body shop facility) should be expense directly to that specific department (body shop would have the rent, utilities, taxes, etc. expensed directly to the body shop department.


FCA (2/18)

DEPARTMENTALIZATION

Gross Profit Allocation Method

Expenses not directly attributable to a specific department can be allocated based upon the percentage of total dealership gross profit each specific department contributes to the entire dealership. For example, office supplies could be allocated to each department based on this method.

Office Supply Expense - $4,000

Total dealership gross profit - $100,000

New Car Sales (Department A) Gross Profit - $20,000 or 20% of total dealership gross profit ($20,000 3 $100,000)

Used Car Sales (Department B) Gross Profit - $30,000 or 30% of total dealership gross profit ($30,000 3 $100,000)

Service Mechanical (Department D) Gross Profit - $30,000 or 30% of total dealership gross profit ($30,000 3 $100,000)

Parts Department (Department F) Gross Profit - $20,000 or 20% of total dealership gross profit ($20,000 3 $100,000)

Allocation of $4,000

Department Allocation % from above Allocation Amount

A 20% $800 (20% x $4,000)

B 30% $1,200 (30% x $4,000)

D 30% $1,200 (30% x $4,000)

F 20% $800 (20% x $4,000)

(2/18)


FCA 14-3

DEPARTMENTALIZATION

Employee Count Method

Expenses not directly attributable to a specific department can be allocated based upon the percentage of total dealership employee count each specific department contributes to the entire dealership. For example, administrative and general salaries and wages could be allocated to each department based on this method.

Administrative and general salaries and wages expense - $10,000

Total dealership head count (not including non-allocated personnel) - 50

New Car Sales (Department A) head count - 10 or 20% of total dealership head count (10 3 50)

Used Car Sales (Department B) head count - 5 or 10% of total dealership head count (5 3 50)

Service Mechanical (Department D) head count - 25 or 50% of total dealership head count (25 3 50)

Parts Department (Department F) head count - 10 or 20% of total dealership head count (10 3 50)

Allocation of $10,000 administrative and general salaries and wages expense


A 20% $2,000 (20% x $10,000)

B 10% $1,000 (10% x $10,000)

D 50% $5,000 (50% x $10,000)

F 20% $2,000 (20% x $10,000)


FCA

(2/18)

DEPARTMENTALIZATION

Percentage of Payroll Method

Expenses not directly attributable to a specific department can be allocated based upon the percentage of total dealership payroll each specific department contributes to the entire dealership. For example, administrative and general salaries and wages could be allocated to each department based on this method.

Administrative and general salaries and wages expense - $10,000

Total dealership payroll expense (not including non-allocated personnel) - $50,000

New Car Sales (Department A) payroll expense - $15,000 or 30% of total dealership payroll expense ($15,000 3 $50,000)

Used Car Sales (Department B) payroll expense - $7,500 or 15% of total dealership payroll expense ($7,500 3 $50,000)

Service Mechanical (Department D) payroll expense - $20,000 or 40% of total dealership payroll expense ($20,000 3 $50,000)

Parts Department (Department F) payroll expense - $7,500 or 15% of total dealership payroll expense ($7,500 3 $50,000)

Allocation of $10,000 administrative and general salaries and wages expense


A 30% $3,000 (30% x $10,000)

B 15% $1,500 (15% x $10,000)

D 40% $4,000 (40% x $10,000)

F 15% $1,500 (15% x $10,000)

(2/18)


FCA 14-5

DEPARTMENTALIZATION

Percentage of Square Footage Method

Expenses not directly attributable to a specific department can be allocated based upon the percentage of total dealership square footage each specific department contributes to the entire dealership. For example, rent expense could be allocated to each department based on this method. Please note that in some areas where land prices are at a premium, it may be more advisable to use the Relative Value Factor Method as discussed below.

Rent expense - $15,000

Total dealership square footage (not including administrative area) - 75,000

New Car Sales (Department A) square footage - 10,000 or 13% of total dealership square footage (10,000 3 75,000)

Used Car Sales (Department B) square footage - 5,000 or 7% of total dealership square footage (5,000 3 75,000)

Service Mechanical (Department D) square footage - 40,000 or 53% of total dealership square footage (40,000 3 75,000)

Parts Department (Department F) square footage - 20,000 or 27% of total dealership square footage (20,000 3 75,000)

Allocation of $15,000 rent expense


A 13% $1,950 (13% x $15,000)

B 7% $1,050 (7% x $15,000)

D 53% $7,950 (53% x $15,000)

F 27% $4,050 (27% x $15,000)


FCA (2/18)

DEPARTMENTALIZATION

Predetermined percent as defined by dealership accounting procedure

Expenses not directly attributable to a specific department can be allocated based upon a predetermined percentage as defined by the dealership. A recommended method at determining the percent for allocation is using the National Automobile Dealer Association (NADA) guidelines (from NADA 20 Group Operating and Expense Profiles, 1997, pages 6, 7.) For example, real estate insurance expense could be allocated to each department based on this method.

Real estate insurance expense - $5,000

Predetermined percent by department (from NADA 20 Group Operating and Expense Profiles, 1997, pages 6, 7.)

New Car Sales (Department A) – 35% Used Car Sales (Department B) – 20% Service Mechanical (Department D) – 30% Parts Department (Department F) – 15%

Note: Body Shop allocation is calculated as follows:

Multiply the fixed expense x 30% (service department allocation % from NADA suggestion above)

Allocate the expense to the service department and body shop based upon the % of total service department and body shop gross profit each department (service department and body shop) contribute. An example of calculating the:

Depreciation Expense – (Other than Buildings and Building Equipment) Account 391 = $10,000 for month Service Department Gross Profit = $30,000 for month Body Shop Gross Profit = $20,000 for month

Allocation for Service Department and Body Shop Depreciation Expense

Depreciation Allocation to Service Department and Body Shop = 30% x $10,000 = $3,000

Service Department % Gross Profit as total of Service Department and Body Shop = ($30,000 / ($30,000 +

$20,000) = $30,000 / $50,000 = 60% Body Shop % Gross Profit as total of Service Department and Body Shop = ($20,000 / ($30,000 + $20,000) =

$20,000 / $50,000 = 40%

Service Department depreciation allocation = $3,000 x 60% = $1,800 Body Shop depreciation allocation = $3,000 x 40% = $1,200

Allocation of $5,000 real estate insurance expense


A 35% $1,750 (35% x $5,000)

B 20% $1,000 (20% x $5,000)

D 30% $1,500 (30% x $5,000)

F 15% $750 (15% x $5,000)

(2/18)


FCA 14-7

DEPARTMENTALIZATION

Relative Value Factor Method

The value assigned by the dealer to each department based on cost, importance, location, etc. Once determined, they will remain fixed unless the dealership adds to the cost of land and buildings or alters departmental areas, etc. These value factors applied to the square feet occupied will determine each department’s relative percentage factor for expense allocation.

For illustrative purposes, the following example outlines the application of relative value factors to compute the amount of rent to be distributed to each department.

Example: Rent Expense

Monthly $2,500 x 40% (Land) $1,000.00 x 60% (Building) 1,500.00

Total Rent $2,500.00

Land-Distribution

Department

SQ Ft

Occupied

Relative Value Factor

Relative

SQ Ft

Valued

%

Land Rent

New Vehicle–Parking & Storage

15,900

x

1.5

=

23,850

32.0

$320

Used Vehicle–Parking & Display

12,600

x

2.5

=

31,500

42.0

420

Service Shop–General Parking 9,200 x 1.0 = 9,200 12.0 120

Body Shop–General Parking 6,300 x 1.0 = 6,300 9.0 90

Parts–Shipping & Receiving 3,000 x 1.0 = 3,000 4.0 40

Administrative–Parking & Vacant

1,600

x

0.5

=

800

1.0

10

Totals 48,600

74,650 100.0% $1,000.


FCA (2/18)

DEPARTMENTALIZATION

Building-Distribution

Relative

Department

SQ Ft Occupied

Value Factor

Relative SQ Ft

Valued %

Bldg. Rent

New Vehicle 1,600 x 3.0 = 4,800 19.0 $285

Used Vehicle 400 x 2.5 = 1,000 4.0 60

Service–Shop 4,300 x 1.5 = 7,950 31.0 465

–Office 600 x 2.5

Body–Shop 3,200 x 1.5

–Office 400 x 2.5 5,800 23.0 345

Parts 2,800 x 1.0 2,800 11.0 165

Administrative 1,200 x 2.5 = 3,000 12.0 180

Totals 14,500 25,350 100.0% $1,500.

Rent Expense Summary

Rent

Department

Land

Expense Building

Total

Acct. No.

New Vehicle $320 + $285 = $605 A

Used Vehicle 420 + 60 = 480 B

Service Mechanical 120 + 465 = 585 D

Service Body 90 + 345 = 435 E

Parts 40 + 165 = 205 F

Administrative 10 + 180 = 190 W

Total Rent $1,000 $1,500 $2,500 382

Each item of these expenses that can be identified with a specific department should be distributed to that department. All remaining items should then be allocated on the basis of each department’s occupied space. Consideration should be given individually to land and building areas occupied by each department. A relative value factor is then assigned so the expense items can be allocated based upon occupancy. Each dealership should establish its own relative value factors.

(2/18)


FCA 14-9

DEPARTMENTALIZATION

Equally distributed among all departments method

Expenses not directly attributable to a specific department can be allocated equally to each department of the dealership. For example, data processing expenses could be allocated to each department based on this method. Typically, this is not recommended.

Data processing expense – $6,000

New Car Sales (Department A) – 25%

Used Car Sales (Department B) – 25%

Service Mechanical (Department D) – 25%

Parts Department (Department F) – 25%

Allocation of $6,000 data processing expense


A 25% $1,500 (25% x $6,000)

B 25% $1,500 (25% x $6,000)

D 25% $1,500 (25% x $6,000)

F 25% $1,500 (25% x $6,000)


FCA (2/18)

DEPARTMENTALIZATION

Following are suggestions for distributing fixed expenses, including owners’ and officers’ salaries. Generally these suggestions will provide reasonably accurate results. However, it should be recognized that there may be circumstances in individual dealerships that will justify using other distribution methods. In this event, the suggested method should be modified to meet the dealership’s requirements.

A/C 362 Salaries and Wages – Administrative and General

Recommend using 365-A, 365-B, 365-D, 365-E, 365-F for proper departmental expense allocation. Distribute the salary of each employee charged to this account directly to the operating departments based on periodic analyses of the duties of each employee. Salaries of employees whose duties are such that their earnings cannot be allocated directly to the operating departments should be distributed using either the employee count method or percentage of payroll method.

Expense will appear on CHY2287-5 of the financial statement.

An alternative method often used is to distribute total administrative salaries on the basis of the number of employees in each of the operating departments.

A/C 363 Employees Benefits

Recommend using 365-A, 365-B, 365-D, 365-E, 365-F for proper departmental expense allocation. Distribute each item of this expense directly to the operating departments based upon the duties of the employees on whose behalf the benefits are incurred. For consistency benefits applicable to employees whose duties are such that their costs cannot be allocated directly to the operating departments should be distributed using either the employee count method or percentage of payroll method.


Alternative methods are to base the distribution of employee benefits on payroll dollars or number of employees, although these methods are usually less accurate.

NOTE:

Each item in this account should be reviewed individually. For example, pension and retirement costs usually are based upon a number of factors. Each department’s share of pension and retirement costs should be based upon its pro rata share of the relevant factors in the specific plan subscribed to by the dealership.

(2/18)


FCA 14-11

DEPARTMENTALIZATION

A/C 365 Payroll Taxes

Recommend using 365-A, 365-B, 365-D, 365-E, 365-F for proper departmental expense allocation. For consistency, taxes applicable to employees whose duties are such that their costs cannot be allocated directly to the operating departments should be distributed using either the employee count method or percentage of payroll method.

Expense will appear on CHY2287-5 of the financial statement. Payroll taxes usually can be distributed directly to the operating departments. Taxes applicable to employees whose duties are such that their costs cannot be allocated directly to the operating departments should be allocated to the operating departments based on one of the allocation methods discussed above. It is recommended that these costs be distributed using either the employee count method or percentage of payroll method.

Various Semi-Fixed Expenses

A/C 367 Advertising – General and Institutional A/C 368 Stationery, Office Supplies and Postage A/C 370 Legal, Auditing and Collection Expense A/C 371 Other Outside Services A/C 372 Company Car Expense A/C 373 Dues, Subscriptions, and Contributions A/C 374 Data Processing Service A/C 377 Travel and Entertainment

Recommend using 365-A, 365-B, 365-D, 365-E, 365-F for proper departmental expense allocation. A recommended method for allocation is equally distributed among all departments method.


Distribute each item of these expenses to the operating departments incurring or benefiting from such expense. Items of a general nature or costs that cannot be allocated directly to the operating departments should be allocated to the operating departments based on one of the allocation methods discussed above. It is recommended that these costs be distributed by the equal distribution among all departments method.

A/C 378 Bad Debts

Recommended using 378-A, 378-B, 378-D, 378-E, 378-F for proper departmental expense allocation. A recommended method for allocation is Predetermined percent as defined by dealership accounting procedure, using NADA 20 Group Operating and Expense Profiles.


Distribute this expense to the operating departments based upon prior loss experience when the (reserve) allowance method is used.

Distribute each item to the department responsible for the sale that resulted in the bad debt loss when the direct write-off method is used.


FCA (2/18)

DEPARTMENTALIZATION

A/C 380 Miscellaneous

Recommend using 380-A, 380-B, 380-D, 380-E, 380-F for proper departmental expense allocation.

A recommended method for allocation is equally distributed among all departments method.


Distribute each item of this expense to the operating departments incurring or benefitting from such expense.

Items of a general nature or costs that cannot be allocated directly to the operating departments should be allocated to the operating departments based on one of the allocation methods discussed above. It is recommended that these costs be distributed by the equal distribution among all departments method.

Rent and Equivalent

A/C 381 Interest on Mortgage A/C 382 Rent A/C 383 Amortization of Leaseholds A/C 384 Depreciation – Buildings and Building Equipment A/C 385 Taxes – Real Estate A/C 386 Insurance – Real Estate

Recommend using A-New Vehicle, B-Used Vehicle, D-Service, E-Parts, F-Body Shop for proper departmental expense allocation. A recommended method is using the Percentage of Square Footage Method or the Percentage of Gross Profit method. The Relative Value Factor may also be used. As noted above, if the rent and equivalent expense can be directly allocated to a specific department (i.e. stand-alone body shop will have its own rent and equivalent), this should be done.


A/C 387 Maintenance and Repair – Real Estate

Recommend using A-New Vehicle, B-Used Vehicle, D-Service, E-Parts, F-Body Shop for proper departmental expense allocation. A recommended method is using a Percentage of Square Footage Method.


First distribute each item that can be identified with a specific department to that department. Then allocate all remaining items to each department on the same basis used to distribute rent and equivalent.

(2/18)


FCA 14-13

DEPARTMENTALIZATION

A/C 388 Interest - (Other than Floor Plan and Mortgage)

Recommend using 388-A, 388-B, 388-D, 388-E, 388-F for proper departmental expense allocation. A recommended method for allocation is Predetermined percent as defined by dealership accounting procedure, using NADA 20 Group Operating and Expense Profiles.


Items whose costs that cannot be allocated directly to the operating departments should be allocated to the operating departments based on one of the allocation methods discussed above. It is recommended that these costs be distributed by using the predetermined percent as defined by dealership accounting procedure, using NADA 20 Group Operating and Expense Profiles method.

A/C 389 Insurance (Other than Real Estate)

Recommend using 389-A, 389-B, 389-D, 389-E, 389-F for proper departmental expense allocation. A recommended method for allocation is equally distributed among all departments method.


Insurance costs for merchandise inventory and building contents are based upon the value of the assets insured. These expenses should be distributed to the department responsible for the merchandise and/or equipment. For example, the cost of insuring the parts inventory should be charged to the Parts Department. Items that are not traceable to an operating department are allocated to each department. It is recommended that the equal distribution among departments method be used.

A/C 390 Taxes and Licenses (Other than Payroll and Real Estate)

Recommended using 390-A, 390-B, 390-D, 390-E, 390-F for proper departmental expense allocation. A recommended method for allocation is equally distributed among all departments method.


Distribute each item directly to operating departments based upon the nature of the expense. Items that are not traceable to an operating department are allocated to each department. It is recommended that the equal distribution among departments method be used.


FCA (2/18)

DEPARTMENTALIZATION

A/C 391 Depreciation – (Other than Buildings and Building Equipment)



Distribute this expense to the departments using such equipment. Items that are not traceable to an operating department are allocated to each department. It is recommended that the predetermined percent as defined by dealership accounting procedure, using NADA 20 Group Operating and Expense Profiles method be used.

A/C 392 Maintenance and Repairs (Other than Buildings and Building Equipment)



Distribute each item of this expense to the departments incurring or benefiting from such expense. Items of a general nature are allocated to each department. It is recommended that the predetermined percent as defined by dealership accounting procedure, using NADA 20 Group Operating and Expense Profiles method be used.

A/C 393 Equipment Rental – (Other than Service and Parts Equipment)



Distribute each item of this expense to the departments incurring or benefiting from such expense. Items of a general nature are allocated to each department. It is recommended that the predetermined percent as defined by dealership accounting procedure, using NADA 20 Group Operating and Expense Profiles method be used.

(2/18)


FCA 14-15

DEPARTMENTALIZATION

A/C 395 Heat, Light, Power and Water



Distribute this expense to the departments incurring or benefiting by such expenditures.

A/C 396 Telephone



Long distance calls should be charged to the originating department. Charges for service (excluding long distance), equipment rental, etc., should be allocated to departments on the basis of the number of instruments used by each department.

Show Parts Gross Transfer

To complete the departmentalization of profit centers, provision has been made for the Service Departments to share in a portion of parts gross profit with the Parts Department. This provision is made for those dealerships that feel the Service and Parts Departments should share the gross profits on parts and accessories sold through the shop.

Each dealership should establish its own method and items for distribution so that they are equitable to all departments. As an example, 50% of the gross profit from parts and accessories - repair orders could be allocated to the Service Department. Consideration would have to be given to the Mechanical Shop and Body Shop, as well as the types of repair orders included (customers, service contract, etc.)

Parts and accessories sales cost of sales and gross profit will continue to be recorded and reported as in the past. The effect of this transfer is provided on the Departmental Operating Summary only.

The intention for adding Wholesale-Parts is for those dealerships having large wholesale operations and is desirous of distributing and isolating expenses for both Parts Operations and Wholesale Operations. This option is offered to satisfy those dealerships desiring to do so.


FCA (2/18)

DUAS 1 31 18 EF - DealerCONNECT Login · The Dealer Uniform Accounting System (DUAS) ... books of...

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