Gross vs Net issues with controller

[sjones5677]

Maybe I'm misunderstanding this. We decided to write off about 50k in obsolete parts at the end of the year. They pulled that number directly from gross sales when finalizing the GM statement. I believe that should only come off net for the month and not the gross. It killed the percentage of sales being reported and also greatly affected all the counter guys commission checks that are all paid from gross. Am I incorrect in my thinking?

[PartsDanager]

There's no way that should affect Gross Profit/Income (line 2, page 4)

Did she have you write an invoice with everything on it at $0? That's the only way I could see that happening. That would create artificial demand for those parts that RIM may pick up and as you said kill your gross.

I think the correct way to do this would be to create a return in MSR, post out that return, and give the comptroller the copy of the return with accounting.

For us, we would use <242 $50000> 687 $50000 for the adjustment, but not all places use that 687 and I doubt you have that kind of buildup anyway.

I imagine your office would use an expense account to offset the inventory, which would affect your department profit or loss (line 58)(net).

I'm no comptroller, but this should more likely be put into month 13 anyway, don't quote me on that.

[PartsDanager]

Also, I might add, if they insist on pulling it from the months gross, I'd insist on using the pre-adjustment figure for your pay plans.

Obsolescence is a product of parts management/dealership philosophy, not a product of parts sales. Your countermen have no way of affecting the choice in the writeoff. If I was a counterman in this situation, I would be accusing my office of stealing from me.

[sjones5677]

There's no way that should affect Gross Profit/Income (line 2, page 4)

Did she have you write an invoice with everything on it at $0? That's the only way I could see that happening. That would create artificial demand for those parts that RIM may pick up and as you said kill your gross.

I think the correct way to do this would be to create a return in MSR, post out that return, and give the comptroller the copy of the return with accounting.

For us, we would use <242 $50000> 687 $50000 for the adjustment, but not all places use that 687 and I doubt you have that kind of buildup anyway.

I imagine your office would use an expense account to offset the inventory, which would affect your department profit or loss (line 58)(net).

I'm no comptroller, but this should more likely be put into month 13 anyway, don't quote me on that.

Thanks for the reply. We did not bill it out on a counter ticket for the reasons you listed. We did a factory return in Dealertrack and posted it out and gave her the copy. I will discuss with her about the 13 month. Again, thanks for your advice.

[PartsDanager]

no problem at all. I'm invested now in how that turns out for you.

[sjones5677]

We did get it resolved. I plead my case to the controller who then turned around and contacted our CPA. Got our gross back to where it should have been just before the financial was submitted to GM. Put the write off to the 13th month. All is well will counter commissions now.

[PartsDanager]

I'm glad to hear it!