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ilovemyjob
Sep 17, 2013, 08:15 AM
I have just taken over the books for a truck repair shop, we do a lot of warranty work and so far they simply do up the work order and zero out the prices. This doesn't seem to me to be the proper practice - in my minds eye it should be going to a warranty expense account. Am I out to lunch or is he really shooting himself in the financial foot by doing it the way he is?

AtlantaTaxExpert
Sep 17, 2013, 08:49 AM
If he is reimbursed for the warranty work by the home offi ce, then, yes, a separate account should be maintained.

If it is his OWN warranty work, then zeroing out is okay.

ilovemyjob
Sep 17, 2013, 09:39 AM
Thank you, he is an independent shop so his current method will be maintained :)