When you review the accounting entries for a Unit Deal, you may notice that parts, labour, and other committed deal options are posting to the same General Ledger (GL) accounts as the unit itself — not to part or labour GL accounts. This article explains why that happens and how the two- or three-invoice structure behind every Unit Deal keeps each department's profitability accurate.
How the Invoice Structure Works
Every committed deal option on a Unit Deal involves two or three separate invoices:
A Deal Merchandise Invoice — fulfils items to the deal from the Deal Merchandise section
A Deal Service Invoice — fulfils items to the deal from the Deal Service section
The Unit Deal Invoice — the customer-facing invoice for the overall deal
The Deal Merchandise and Deal Service invoices handle departmental profitability. The Unit Deal Invoice handles what is ultimately charged to the customer. Understanding both sides is key to reading the accounting entries correctly.
Keeping Departmental Profitability Accurate
The primary profitability for parts and labour must remain with the parts and service departments — not with the unit sales department. The accounting structure enforces this in two ways:
The parts and service departments earn their profitability based on how internal pricing is set up.
Any variance between that internal price and what the customer is ultimately charged on the deal determines the profit or loss absorbed by the unit sales department.
For example, if a deal includes a part given away free to the customer, the unit sales department absorbs that loss — not the parts department.
Deal Merchandise and Deal Service Invoices
The Deal Merchandise and Deal Service invoices are where parts and service departments are credited with their profitability. For each item on one of these invoices, the accounting entries work as follows (using a part priced at $100 internal with a $75 cost as an example):
GL Account | Debit | Credit |
Parts Revenue | $100.00 | |
Unit Inventory | $100.00 | |
Parts COGS | $75.00 | |
Parts Inventory | $75.00 |
Two things happen here. First, the parts department is credited with its $25 profit — the difference between $100 revenue and $75 cost of goods sold (COGS). Second, the $100 internal invoice price is debited against Unit Inventory, recording it as a cost against the unit on the deal. This is why the deal option appears under unit GL accounts rather than parts GL accounts on the Unit Deal Invoice side.
Unit Deal Invoice
The Unit Deal Invoice is where any variance between the internal price and what the customer was actually charged determines the unit sales department's profit or loss on that deal option. In this example, the sales team gave the customer a $10 discount, so the customer was invoiced $90 instead of the $100 internal price.
Deal Invoice
GL Account | Debit | Credit |
Unit Revenue | $90.00 |
Deal COGS Journal
GL Account | Debit | Credit |
Unit COGS | $100.00 | |
Unit Inventory | $100.00 |
The unit sales department shows $90 in revenue against $100 in COGS — a $10 loss that directly reflects the discount given to the customer. The unit sales department absorbs the variance; the parts department keeps its $25 profit recorded on the Deal Merchandise Invoice.
If the sales department had charged the customer the full internal price of $100, the $100 Unit Revenue and $100 Unit COGS would cancel each other out, resulting in no profit or loss for the sales department on that deal option.
Why Parts and Labour Post to Unit GL Accounts
Parts and labour deal options post to unit GL accounts on the Unit Deal Invoice because their revenue and departmental profitability have already been recorded by the Deal Merchandise or Deal Service invoice that fulfilled them to the deal. By the time the Unit Deal Invoice is generated, the parts and service departments have already received their credit. What remains on the unit side is only the variance — the sales department's gain or loss based on what was ultimately charged to the customer.