3/21/2024 0 Comments Auto dealer cogs accountsThe following illustrates the ledger transaction for a wholesale transaction.Ĭost of sales - reconditioning - used cars - wholesaleĪ customer agrees to a BHPH transaction involving the same vehicle with $1,000 down and an extended service contract and finances the balance with the dealership. In this case the ledger transaction would look similar to the following:Ĭost of sales - reconditioning - used cars - cash A customer pays $10,500 for the same vehicle and purchases an extended service contract. If you wanted to specifically isolate your retail deals from your sub prime deals, you would also use sale, cost of sales, reconditioning and commission accounts with “sub prime” replacing the word “retail” in the account name.Ī retail cash deal would look a bit differently in the ledger. If the transaction were a retail sub prime car deal, the following additional lines would be added to the ledger entry: The ledger entry would look similar to the following:Ĭost of sales - reconditioning - used cars - retailĬost of sales - extended service contract The customer is financing the vehicle and you have reserve opportunity. Selling price of the vehicle is $9,500 and the customer agrees to purchase CL&AH, GAP and an extended service contract. Retail finance can also be broken down into different types, retail prime and sub prime car deals which should be recorded differently in your general Retail ledger.Ī customer has agreed to purchase a unit you have stocked for $7,500, original cost of $7,000 plus $500 in reconditioning repairs. There are retail finance, retail cash, wholesale and BHPH deals to consider when setting up your F&I program so your accounting transactions are recorded accurately to furnish you the best possible information to analyze your business. Accounting for the different types of car deals generated from your F&I programs is important if you want to completely understand your business operations and the resulting effective gross profits.
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