New Vehicle Sale — Cash / Finance Customer
Recording the sale of a new vehicle to a retail customer paying cash or arranging third-party financing.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash / Finance Company Receivable | Asset (+) | 28,500.00 | - |
| New Vehicle Sales Revenue | Revenue (+) | - | 28,500.00 |
| Cost of Goods Sold — New Vehicle | Expense (+) | 26,200.00 | - |
| New Vehicle Inventory | Asset (-) | - | 26,200.00 |
💡 Accountant's Note
Revenue on new vehicle sales is recognized when the vehicle title passes to the customer — typically at delivery and signing. The COGS is the vehicle's cost (invoice price from the manufacturer plus any pre-delivery preparation costs). The gross profit margin on new vehicles is typically thin (2-5%), making F&I (Finance & Insurance) and service revenue critical to dealership profitability.
Practitioner & Systems Framework
💻 ERP Architecture
New vehicle sales are processed in the Dealer Management System (DMS) — CDK Global, Reynolds & Reynolds, or Dealertrack. The DMS generates the retail deal jacket, calculates COGS from the inventory record, and posts the revenue and COGS entries to the GL simultaneously at deal closing. Each vehicle is tracked in inventory by VIN (Vehicle Identification Number). The DMS interfaces with the manufacturer's portal for order tracking and incentive claims. F&I (Finance & Insurance) products sold simultaneously with the vehicle are tracked as separate revenue lines.
⚠️ Audit Flags
Auditors test vehicle sales against signed buyer's orders and title transfer documents. Confirm that revenue is recognized at delivery (not at order or deposit). Review deals at period-end — vehicles signed but not yet delivered should remain in inventory with a customer deposit liability (not revenue). Test that manufacturer incentives (customer cash rebates applied at point of sale) are correctly reflected in the net selling price and not duplicated. Confirm the COGS matches the inventory record for the specific VIN.
📄 Required Documentation
Signed buyer's order and delivery receipt, title transfer documentation, VIN-level inventory record (cost), DMS deal jacket, manufacturer invoice (Monroney sticker), customer deposit register (for vehicles ordered but not yet delivered), and F&I product schedule on the deal.
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