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Financial Statements

Dealership Chart of Accounts Manual

?Page Publications June, 2002, All Rights Reserved.

.Financial Statements.

This chapter should provide the NIADA dealer, office manager, internal auditor and outside accountant with a financial statement illustration on profit center accounting, as it has been discussed throughout this manual.

Topic No.

FINANCIAL STATEMENTS

Page No.

1.0

Introduction.

1

1.1

The General Ledger and the Financial Statement.

1

1.2

Page 1 ? The Balance Sheet.

5

1.3

Page 2 ? The Income Statement ? Sales & Gross Profit

10

1.4

Page 3 ? The Income Statement - Expenses

15

1.5

Summary

17

Financial Statements

1.0 Introduction.

In May 2004, NIADA adapted a standardized three-page financial statement format for its dealer-members, which is shown on the following pages. The three financial statement pages include:

? Page 1 - Balance Sheet ? Page 2 - Income Statement and YTD Operations

Summary ? Page 3 ? Income Statement and Personnel Analysis.

In this chapter, we will review this newly adapted statement and how it can be used to manage dealership operations. The statement format is similar to those used by new vehicle franchise dealerships. Therefore, the statement has sections for each department including vehicle sales, F&I, parts and service.

1.1 The General Ledger and the Financial Statement.

A monthly financial statement presents month-end and year-to-date balances in the dealership's general ledger. The Balance Sheet contains balances for Assets, Liabilities and Net Worth accounts. The Income Statement contains balances in Sales, Cost of Sales, Expenses and Other Income/Expense accounts. For more information on how basic financial statements are calculated, see the NIADA Dealership Accounting Training Manual or any general accounting or bookkeeping textbook.

NIADA's new financial statement design uses standard NIADA chart of accounts that are presented in this manual, as well as the other NIADA standardized accounting manuals. The numbering system for these accounts is shown below.

? Assets: Account Numbers 1000 ? 1990 ? Liabilities and Net Worth: Account Numbers 2110 ? 2570 ? Sales and Cost of Sales Accounts: 3500 ? 6290 ? Expense Accounts: 8000 ? 8520 ? Other Income and Expense Accounts: 9020 - 9220

For each financial statement line, the account numbers included in the dollar amount are shown to the left of the dollar amount. For example, Page 1 ? Line 2 of the Financial Statements reports Cash on Hand of $500. This balance is the current YTD total in account 1000 ? Petty Cash Fund.

Line 3 reports Cash in Bank of $41,542. This amount is the combined balance of accounts 1010 ? Cash in Bank and 1015 ? Cash in Bank ? Payroll. If the dealership had other cash in bank account numbers, these accounts would also be pointed to line 3.

CURRENT ASSETS: CASH ON HAND CASH IN BANK

ASSETS

ACCT. NO.

1000 1010-1015

AMOUNT

Line

DOLLARS ONLY No.

1

500 2 41,542 3

As you study these statements, take time to understand how each line is calculated, and whether one or more account balances is included in the dollar amount shown for each line.

NIADA Chart of Accounts Manual

1

[June, 2002]

Financial Statements

Exhibit: NIADA Standardized Financial Statement ? Page 1.

DEALER FINANCIAL STATEMENT

PAGE 1

DEALER FOR PERIOD OF

JAN, 200X

CITY AUTO SALES, INC.

TO

JULY, 200X

ASSETS

CURRENT ASSETS: CASH ON HAND

CASH IN BANK

CONTRACTS IN TRANSIT

CASH INVESTMENTS AND TIME DEPOSITS

TOTAL CASH AND EQUIVALENT (LINES 2-5)

RECEIVABLES : RETAIL VEHICLES

> 60 DAYS

500

WHSLE & DLR TRANSFER

LEASE & RENTAL

FINANCE & INSURANCE

235

CUSTOMER NOTES

750

SERVICE, PARTS & BODY ACCOUNTS SERVICE CONTRACT CLAIMS

1,250 115

ALLOWANCE FOR DOUBTFUL ACCOUNTS

TRADE RECEIVABLES - AFFILIATES

OTHER RECEIVABLES

TOTAL RECEIVABLES (LINES 8-17)

INVENTORIES:

UNITS > 60 DAYS

DEMONSTRATORS OTHER AUTOMOTIVE USED CARS USED TRUCKS REMARKETED VEHICLES

2

2

4

4

35

12

41

5

22

8

PARTS & ACCESSORIES

OTHER INVENTORY

ALLOWANCE - PARTS INVENTORY ADJUSTMENT

LIFO RESERVE - USED VEHICLES

LIFO RESERVE - PARTS & ACCESSORIES

TOTAL INVENTORIES (LINES 21-30)

PREPAID EXPENSES:

PREPAID ADVERTISING

PREPAID TAXES

PREPAID RENT

PREPAID INSURANCE

PREPAID OTHER

TOTAL PREPAID EXPENSE (LINES 33-37)

OTHER CURRENT ASSETS TOTAL CURRENT ASSETS (LINES 6+18+31+38+39)

LEASE AND RENTAL VEHICLES:

LEASE VEHICLES - NET

UNITS

RENTAL VEHICLES - NET

UNITS

DRIVER TRAINING VEHICLES - NET UNITS

TOTAL LEASE & RENTAL VEHICLES (LINES 56 THRU 62)

FIXED ASSETS: LAND & IMPROVEMENTS

155,000

BUILDINGS & IMPROVEMTS

MACHINERY & SHOP EQMT

C

O

PARTS & ACC. EQUIPMENT

S

FURN, FIXTURES & SIGNS

T

COMPANY VEHICLES

245,600 45,600 12,400 13,840 1,000

LSEHOLDS & IMPROVEMTS

OTHER FIXED ASSETS

NET TOTAL FIXED ASSETS: (LINES 6 + 24 + 51 + 52 + 53 )

OTHER ASSETS:

LIFE INSURANCE - CASH VALUE

NOTES & RECEIVABLES - OFFICERS & OWNERS

INVESTMENTS IN AFFILIATED COMPANIES

ACCT. NO.

1000 1010-1015

1020 1030-1050

1100 1110 1120 1130 1140 1150 1160 1170 1360 1370

1380 1440 1450 1470 1490 1500 1520-1570 1970 1980 1990

1610 1620 1630 1640 1660

1670

1680-1690 1700-1710 1720-1730

1750-1760 1770-1780 1790-1800 1810-1820 1830-1840 1850-1860 1870-1880

1890

1900 1910 1920

ADDRESS 1205 CENTURY AVENUE

NIADA MEMBER SINCE

1987

CITY HOMETOWN

STATE

ST

ZIP

BALANCE SHEET

12345

AMOUNT

Line

DOLLARS ONLY No.

LIABILITIES AND NET WORTH

ACCT. NO.

AMOUNT DOLLARS ONLY

500 41,542 84,652 15,000

1 CURRENT LIABILITIES 2 ACCOUNTS PAYABLE 3 CUSTOMER DEPOSITS 4 CUSTOMER ACCOMMODATIONS 5 LICENSE & REGISTRATION FEES

2000

1,865

2010

4,500

2020

945

2030

615

141,694 18,500

6 VEHICLE PROTECTION & ESC PAYABLE 7 VEHICLE LIEN PAYABLE 8 OTHER ACCOUNTS PAYABLE

2040

3,284

2050

18,456

2060

9 TOTAL ACCOUNTS PAYABLE (LINES 2-8)

29,665

2,458 3,500 3,550

905

10 CURRENT NOTES PAYABLE 11 NOTES PAYABLE - USED VEHICLES 12 NOTES PAYABLE - LEASE & RENTAL VEHICLES 13 CURRENT PORTION - LONG TERM DEBT 14 NOTES PAYABLE - OTHER

2110

458,714

2120

2130

21,785

2140

19,852

(1,200) 15 TOTAL CURRENT NOTES PAYABLE (LINES 11-14)

500,351

16 ACCRUED LIABILITIES: 17 INTEREST PAYABLE

2200

2,614

27,713 18 SALARIES, WAGES & COMMISSIONS PAYABLE

2210

14,901

19 INSURANCE PAYABLE

2220

20 PAYROLL TAXES PAYABLE

2230

22,521 21 SALES TAXES PAYABLE

2240

7,541 22 INCOME TAXES PAYABLE

2250

297,750 23 OTHER TAXES PAYABLE

2260

355,839 24 EMPLOYEE BONUSES PAYABLE

2270

283,800 25 OWNERS' BONUSES PAYABLE

2280

8,975 26 PENSION FUND/PROFIT SHARING PAYABLE

2290

384 27 OTHER PAYABLES

2300

28 RESERVE FOR REPO, F&I & SVC CONTRACT LOSSES

2310

29 OTHER RESERVES

2320

30 TOTAL ACCRUED LIABILITIES (LINES 17-29)

976,810 652

31 WORKING

32 CAPITAL 33

GUIDE-$ ACTUAL-$

(ASSET LINE 40 MINUS LIABILITY LINES 9 + 15 +30)

14,953 34 OTHER LIABILITIES:

35 LONG TERM DEBT:

2400

8,432 36 NOTES PAYABLE - OWNERS/OFFICERS

2410

1,475 18,410

458

6,000 1,050 12,000 22,500 79,408

178,522

37 NOTES PAYABLE - AFFILIATED COMPANIES

2420

24,037 38 MORTGAGES PAYABLE - REAL ESTATE

2430

32,000

1,170,254

39 DEFERRED INCOME TAX 40 OTHER LIABILITIES 41 TOTAL OTHER LIABILITIES (LINES 35-40)

2440 2450

210,522

42 TOTAL LIABILITIES (LINES 15+41)

819,946

43 NET WORTH: 44 CAPITAL STOCK 45 ADDITIONAL PAID IN CAPITAL 46 RETAINED EARNINGS

2500

10,000

2510

95,000

2520

602,197

155,000 47 DIVIDENDS

2540

187,554 48 INVESTMENTS (PROPRIETOR OR PARTNERS)

2550

38,526 8,432 9,854 200

399,566

10,589 10,000

49 WITHDRAWALS / DRAWINGS

2560

50

UNITS PLACED IN SERVICE DURING CURRENT MONTH

CURRENT EARNINGS BEFORE TAXES

51 RETAIL UNIT SALES 52 FROM PAGE 2

CARS LINE 20-21

TRUCKS LINE 21

OTHER LINE 23

TOTAL UNITS

AMOUNT

53 JANUARY

32

22

54

16,852

54 FEBRUARY

21

37

58

14,214

55 MARCH

14

38

2

54

23,200

56 APRIL

24

25

49

15,478

57 MAY

19

32

51

12,789

58 JUNE

22

39

1

62

24,875

59 JULY

24

35

59

11,358

ADVANCES - AFFILIATED PARTIES ADVANCES - OTHER PARTIES NOTES & RECEIVABLES - OTHER FINANCE RECEIVABLES - DEFERRED OTHER INVESTMENTS & MISC. ASSETS DEPOSITS ON CONTRACTS OTHER ASSETS TOTAL OTHER ASSETS: (LINES 57-66) TOTAL ASSETS (LINES 40+55+67)

1930

60 AUGUST

1940

61 SEPTEMBER

1950

850 62 OCTOBER

1960

4,500 63 NOVEMBER

1970

50,000 64 DECEMBER

1980

65

UNIT TOTALS

156

228

3

387

1990

150 66 NET EARNINGS (LINE 69 MINUS 70)

76,089 67 TOTAL NET WORTH (LINES 47 THRU 53 + 71)

1,645,909 68 TOTAL LIABILITIES AND NET WORTH (LINES 44 + 45 + 72)

118,766 825,963 1,645,909

Dealer Member - NIADA

National Independent Automobile Dealers Association

SIGNATURE:

DATE:

This is the Balance Sheet. Assets are shown in the left column with Liabilities and Net Worth account balances shown in the right column. The dealership's net profit or loss is shown for each month and year-to-date under the Current Earnings Before Taxes section in the right corner of the form.

NIADA Chart of Accounts Manual

2

[June, 2002]

Financial Statements

NIADA Standardized Financial Statement ? Page 2.

CITY AUTO SALES, INC.

PERIOD ENDING:

JULY, 200X

PAGE 2

LINE NO.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

23

24

MONTH-TO-DATE

SALES

GROSS

UNITS

202,800

43,200 24

(3,250) 22

32,650

1,250 10

331,625 52,400

49,743 35 (4,358)

215 5 (1,000) 1

619,475 619,475

85,800 97 15,874 37

(256) 2 3,542 14

(550) 1 22,785 41 (1,425) 2

39,970

125,770

DEPARTMENTAL GROSS PROFIT ANALYSIS

PER UNIT

ACCOUNT NAME

1,800 USED CAR RETAIL

(148) USED CAR RECONDITIONING

125 USED CAR WHOLESALE SALES

USED CAR INVENTORY ADJUSTMENTS

1,421 USED TRUCK RETAIL

USED TRUCK RECONDITIONING

43 USED TRUCK WHOLESALE SALES

(1,000) USED TRUCK INVENTORY ADJUSTMENTS

REMARKETED RETAIL CAR SALES

REMARKETED WHOLESALE CAR SALES

REMARKETED RETAIL TRUCK SALES

REMARKETED WHOLESALE TRUCK SALES

USED VEHICLE REPOSSESSION LOSSES

AFTERMARKET MERCHANDISE SALES

LIFO ADJUSTMENTS - USED VEHICLES

885 TOTAL USED VEHICLE DEPARTMENT

429 USED VEH. FINANCE INCOME (128) USED VEH. FINANCE CHARGEBACKS 253 USED VEH. INSURANCE INCOME (550) USED VEH. INSURANCE CHARGEBACKS 556 USED VEH. SERVICE CONTRACT INCOME (713) USED VEH. SERVICE CONT. CHARGEBACKS

TOTAL FINANCE AND INSURANCE

TOTAL VEHICLE AND F&I DEPTS.

ACCT. 3500 4510 3520 4530 3540 4550 3560 4570 3580 3590 3600 3610 4620 3630 4640

3700 4710 3720 4730 3740 4750

YEAR-TO-DATE (DOLLARS ONLY)

SALES

GROSS PROFIT UNITS

1,419,600

302,400

156

(22,750)

68

228,550

8,750

71

(7,486)

24

2,321,375

348,201

228

(30,506)

18

366,800

1,505

36

(7,000)

15

14,852 4,351,177

4,351,177

3,240

3

596,354

256

111,118

241

(1,792)

13

24,794

91

(3,850)

7

159,495

267

(9,975)

13

279,790

876,144

PER UNIT

1,938 (335) 123 (312)

1,527 (1,695)

42 (467)

1,080

2,330 462 (138) 272 (592) 598 (767)

25

26

27

15,465

28

1,045

29

2,100

30

1,500

31

32

20,110

33

34

3,126

35

1,127

36

2,489

37

1,847

38

39

125

40

378

41

42

43

44

9,092

45

46

47

48

49

5,465 375 604 150 (325)

6,269

2,040 842 305 420

34 74 145 (300)

3,560

R.O.

301 3

18 2

324

SALES / R.O.

FIXED OPERATIONS ANALYSIS

51 CUSTOMER LABOR SALES - MECHANICAL 348 SERVICE CONTRACT LABOR SALES 117 INTERNAL LABOR SALES 750 SUBLET REPAIR SALES

UNAPPLIED LABOR

62 TOTAL SERVICE DEPARTMENT

% G.P.

65.3% PARTS SALES - MECHANICAL R.O.

74.7% PARTS SALES - SERVICE CONTRACT R.O. 12.3% PARTS SALES - INTERNAL R.O.

22.7% SALES - GAS, OIL & GREASE

PARTS SALES BODY SHOP

27.2% PARTS SALES - COUNTER RETAIL

19.6% PARTS SALES - WHOLESALE

PURCHASE DISCOUNTS AND ALLOWANCES

PARTS INVENTORY ADJUSTMENTS

LIFO ADJUSTMENTS - PARTS INVENTORY

39.2% TOTAL PARTS DEPARTMENT

BODY SHOP - CUSTOMER LABOR SALES

BODY SHOP - INTERNAL LABOR SALES

BODY SHOP - SUBLET LABOR SALES

PAINT & BODY SHOP MATERIAL SALES

UNAPPLIED LABOR

5000 5020 5080 5100 6100

5200 5220 5260 5280 5290 5310 5330 6350 6370 6385

5400 5430 5440 5450 6460

113,683 7,773

14,242 9,711

145,409

22,257 8,024

17,722 13,151

890 2,691

64,735

38,255 2,625 4,228 1,050 (2,119)

44,039

14,331 5,915 2,143 2,951

R.O. SALES / R.O.

2,107

54

21

370

126

113

14

694

2,268

64

% G.P.

0.0% 73.7% 12.1% 22.4%

239 520 1,019 (2,108)

26.8% 19.3%

25,009

38.6%

50

51

29,202

52 648,677

9,829 135,599

TOTAL BODY SHOP DEPARTMENT

33.7% TOTAL PARTS, SERVICE & BODY SHOP 20.9% TOTAL DEALERSHIP GROSS

210,144 4,561,321

69,048 945,192

32.9% 20.7%

53 54 55 56 57 JANUARY 58 FEBRUARY 59 MARCH 60 APRIL 61 MAY 62 JUNE 63 JULY 64 AUGUST 65 SEPTEMBER 66 OCTOBER 67 NOVEMBER 68 DECEMBER 69 YTD TOTAL

TOTAL VEHICLE / F&I

GROSS

117,854 125,486 124,558 144,215 118,952 119,309 125,770

876,144

TOTAL SERVICE GROSS

6,012 5,845 6,528 5,889 6,015 7,481 6,269

44,039

DEALERSHIP OPERATIONS TREND ANALYSIS

TOTAL

TOTAL

TOTAL

TOTAL

TOTAL

PARTS

BODY SHOP DEPT. DLRSHIP OPERATING

GROSS

3,054 3,542 3,270 3,201 4,095 4,287 3,560

GROSS

0 0 0 0 0 0 0

GROSS EXPENSES 134,340 122,754 134,826 124,568 132,847 120,358 137,659 126,558 138,530 127,325 131,391 122,239 135,599 125,874

PROFIT 11,586 10,258 12,489 11,101 11,205 9,152 9,725

OTHER INCOME

(EXPENSE)

5,266 3,956 10,711 4,377 1,584 15,723 1,633

TOTAL

PROFIT (LOSS)

BEFORE BONUS

16,852 14,214 23,200 15,478 12,789 24,875 11,358

25,009

0 945,192 869,676

75,516

43,250

118,766

Page two contains the first of two pages of the Income Statement. Month-to-date results are shown in the left hand column with year-to-date totals in the right hand column.

NIADA Chart of Accounts Manual

3

[June, 2002]

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