How Consignment affects your accounts

Dealerlogic Accounting handles Consignment quite differently to “normal” stock. You will not find values for the consignment stock on hand in your balance sheet, nor will you see the sale amounts in respect of consignment vehicles in your revenue accounts. There is a very definite distinction with these vehicles that they are not yours, and that any monies received in respect of their sale are held in trust on behalf of the vendor.

Reconditioning Purchases – whether or not the vendor is going to reimburse you for these, a creditor is raised;

Vendor Consignment Transactions – where you invoice the vendor in respect of costs, fees, reimbursable reconditioning, or where you account to the vendor for the sale of the vehicle: either a debtor or a creditor may be raised;

Sale – the amount that relates to the vehicle itself is posted to a clearing account pending the Vendor Consignment Transaction clearing it back to the vendor, any other amounts relating to add-on extras sold to the customer are posted to the usual revenue accounts;

Commission –seller’s commission may be entered in the usual way and it will be posted to the linked commission accounts.

To correctly reflect all aspects of Consignment Transactions in the General Ledger, specific linked accounts are created for this purpose. A group of accounts with the group header Consignment Accounts is created once the Consignment package is added to your licence file. These accounts are pre-selected to the default settings and may be adjusted by you later.

General Ledger accounts added under the Consignment Accounts group header, found within the Liabilities section.

Sub-Header	Account Description	Account Name & Purpose	Normal Balance
Trust Assets	Trust Account	Trust Account - bank account to which amounts held on trust are deposited	Debit
Trust Assets	Undeposited Trust Monies	Unbanked Trust Funds - cash and cheques received but not yet deposited in the Trust Account.	Debit
Trust Assets	Trust Debtors	Trust Debtors - outstanding amounts owed to the Trust Fund, usually in respect of vehicles sold on consignment, representing the balance payable by the customer.	Debit
Trust Liability	Trust Creditors	Trust Creditors - outstanding amounts owed by the Trust Fund in respect of vehicles sold on consignment, representing the Vendor Consignment Transaction where an amount is directed back to the Vendor and the balance to the Dealer as commission.	Credit
Trust Liability	Proceeds of Consignment Sales	Consignment Clearing - the Sale Price of the vehicle once sold is entered here, awaiting a Vendor Consignment Transaction to indicate how the funds are to be distributed. Automatically cleared to Trust Creditors by a Vendor Consignment Transaction.	Credit
Trust Liability	Deposits Taken on Consignment Sales	Trust Deposits Taken - represents deposits taken against consignment vehicles where the status is “Order Taken”. Automatically cleared to Trust Debtors once the status is moved to “Sold”.	Credit

General Ledger area	Account Name	Description	Normal Balance
Assets	Reconditioning (Recoupable)	Represents the GST exclusive value of Reconditioning applied to consignment vehicles that is flagged as “Recoupable” from the vendor.	Debit
Selling Fee	Sales Income	Commission charged by the dealer to the Vendor as a result of a sold consignment vehicle. Recorded within a “Vendor Consignment Transaction”.	Credit
Sales Income	Recon Expenses Reimbursed	Those Recoupable Reconditioning items now invoiced to the Vendor by way of a Vendor Consignment Transaction	Credit
Sales Income	Other Fees Charged	Other items invoiced to the Vendor by way of a Vendor Consignment Transaction, such as Listing Fee and Fixed Expenses.	Credit
Cost of Sales	Purchases – Consignment Recon	Recon items marked as Recoupable initially applied to the Reconditioning (Recoupable) Asset account are automatically moved to this Cost of Sales account once the vehicle is marked as “Sold”, or when it is Returned to Vendor.	Debit