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CGCPA
CGCPA, CPA
Category: Finance
Satisfied Customers: 3820
Experience:  40+ years experience in taxes and financial planning
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i have two different car dealerships. lot a i use for wholesale.

Customer Question

i have two different car dealerships. lot a i use primarily for wholesale. lot b i use for both wholesale and retail. both bank accounts are connected, but lot a sells inventory to/ from lot b when the bank "sweeps" the account. when doing my profit and loss report on quickbooks i have entered all sweeps from lot b to lot a as sweep from dda and in the memo i'm noting sales. this is legit but the problem comes with the profit and loss statement. lot b is showing a tremendous loss while lot a is showing false high income. this shows up in lot b as inventory expense and in lot a as income;sales. how can i correct this? should i reclassify the sweeps to some other category instead of sales or am i stuck. i.e. must the sweeps be shown as income, or something else. this is the crux of the problem.
Submitted: 5 years ago.
Category: Finance
Expert:  CGCPA replied 5 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

 

If the two lots are in separate corporations or LLCs then you should be showing these entries as intercompany loans rather than sales. One company will have a loan receivable from the other and the other company will have a loan payable on its books. The two loan amounts should be opposites and match in amounts. If the lots are in one entity this also holds true and at year end the two accounts will effectively cancel each other out. There is no proper way to record this activity as sales.

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Customer: replied 5 years ago.
thank you i did renter the info as you suggested now i have more questions do you have a telephone number i really need more help thank you
Customer: replied 5 years ago.
i have questions do you have a telephone number
Expert:  CGCPA replied 5 years ago.

The site rules do not permit telephone contact. WE can continue in this manner if you like.

Customer: replied 5 years ago.
when i accept payment from a floorplan company they are loaning me money to purchase inventory how do i classify this because i deposit the money does it have to be shown as income on my tax return isn't it just a loan show how do i show this ? if shown as income then i am creating false income but i don't know how to show a depost without it being shown as income on quickbooks
Customer: replied 5 years ago.
this goes back to my original question i have 2 separate car lots lot a buys inventory via a floorplan lot a and lot b are set-up with my bank with a sweep account anytime lot a needs money the money is swept from the lot b account to lot a as you stated earlier this activity should be shown as a loan between the 2 companies but lots a & b both receive floorplan money from separate floorplan companies to purchase inventory these floorplan checks are deposited so how do i account for these deposits without counting them as income and creating "false income"
Expert:  CGCPA replied 5 years ago.

Floor plan receipts are loans being received and should be recorded as such. It is not income and should be entered as a loan payable. It does not matter which lot is receiving the funds being advanced. The two sides of the entry are debit cash and credit floor plan payable.