While investigating an auto dealership you calculate the following (refer to the IRS's ATG on...
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Accounting
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 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
- What entry should the dealer make initially and when the holdback is received?
- Should the dealer include the holdback in inventory? Why?
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