I am a bookkeeper in a repair shop the employs vehicles that make road repairs.

In this instance though, the vehicle needing the repair is our own. We just switched computer systems recently, and this new system requires us to create a full invoice for this kind of transaction. Prior to this, we had just been making sure that sales tax had been either charged to us for the parts we purchased, or a use tax accrual was done. Inventory had never been tracked in this company.

My question is this: Obviously, we are never going to be paid for this open invoice in the system, how is this to be relieved from A/R?

Obviously, you're going to credit A/R, but where is the debit offset?

Each repair unit is also going to be its own cost center from a P & L standpoint, so, would the debit to offset the transaction to the A/R be to the Car and Truck Expense for that individual cost center?

Then, on top of that, you are now overstating sales by including internal sales in the gross sales figure, albeit a small amount in most cases.

If anyone can help me with this, I would appreciate it.

Thanks,
Fred

CaptainForest

Normally for a sale, the JE would be:

Dr. AR
Cr. Sales

Dr. COGS
Cr. Inventory

However, in this case, you do not want to do that, you just want to:
Dr. Car and Truck Expense
Cr. Inventory