How to process a trade-in on a sale

KB85

A trade-in is technically a purchase, so should be done as a Purchase order. You are likely to want the item being traded in to be part of your Inventory for future sale.

  1. Enter purchase order for the trade-in
    1. Use a “CASH” or similar supplier
    2. Receive and Pay the invoice against a suspense / contra G / L account
  2. Enter your sale for the new item (e.g. vehicle)
    1. Add a line to the sale representing the trade-in value
      1. Use a SUNDRY or “G / L Account” item code and allocate the G / L account to the same contra account as in step #1
    2. Dispatch and invoice the sale
      1. The Receipt amount will be the sale of the new item less the trade- in amount

Be careful with the tax on the purchase and sale. You may need to seek accounting advice regarding the tax treatment of trade-ins

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