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18 March, 02:02

While investigating an auto dealership you calculate the following [refer to the IRS's ATG on Auto Dealerships]: From "window sticker": MSRP $10,000 Destination Charges 400 MSRP Retail Total $10,400 CASH IN CASH OUT Gross receipt $ 5,000,000 Cost of Goods Sold $ 4,900,000 Sch. C Expenses $ 95,000 Sch. C Depr $ 10,000 Meals $ 1,250 Bureau of Labor Statistics data $ 40,000 Cash In $ 5,000,000 Cash Out $ 5,026,250 From Dealer Invoice:

Vehicle Factory Wholesale Price $9,000 Destination Charges 400 Advertising Association 100 1% of MSRP Holdback 300 3% of MSRP Total Invoice Price $9,800 Holdback: coded amount is (300) 3% of MSRP Inventory Cost to the Dealer $9,500

Do you have any thoughts and what questions would you ask?

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  1. 18 March, 02:13
    0
    With the given data, you asked if I have any thoughts and what questions would I ask?

    1) My first thought

    Since Journal entry for first case:

    Account receivable A/c Dr $9500

    Hold back receivable A/c Dr $ 300

    To revenue A/c $9,800

    Journal entry for Hold back received:

    Bank A/c Dr $300

    To Hold back A/c $300

    I would ask this question:

    What entry should the dealer make initially and when the hold back is received?

    2) My second thought

    Holdback: coded amount is (300) 3% OF MSRP

    question: Should the dealer include the hold back in inventory?

    Explanation:

    I believe this is the interpretation of the question: and my above answers are based on these data below.

    While investigating an auto dealership you calculate the following (refer to the IRS's ATG on Auto Dealerships):

    From 'window sticker':

    MSRP $10,000

    Destination Charges 400

    MSRP Retail Total $10,400

    From Dealer Invoice:

    Vehicle Factory Wholesale Price $9,000

    Destination Charges 400

    Advertising Association is 100, which is 1% of MSRP

    Holdback is 300, which is 3% of MSRP

    Total Invoice Price $9,800

    Holdback: coded amount is (300) 3% OF MSRP

    Inventory Cost to the Dealer $9,500
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