If you want the QuickBooks File from this screen cast so you can see exactly how this was done you can download it in my Knowledge Store for $4.97.
This is a Portable Company File which can be opened in QuickBooks Pro or Premier 2012 for PC. This is also a great way to help me out for all of the time I put into these free screen casts! Thanks!!
Let’s say that you sell inventory and that as part of that process you might accept old inventory as a Trade-In. How to account for this in QuickBooks? The real question is, how to I do the following:
- Give the customer credit for having paid value in the form of a Trade-In
- Get that traded in item into inventory with a quantity and cost when I haven’t and never will receive a bill for it?
This week’s screen cast will answer these questions and probably a few others so please watch and then post your comments and questions below.
Love you site & the information on QB. One thing that is not taken into account on trade in vehicles is the fact that the sales invoice also needs to reflect the Excise Tax the customer will save with the trade. Usually if the trade is $3000 Value & the Vechicle purchasing is $7000 the customer will be taxed on the balance on the $7000-$3000=4000.
Doing it this way does is great but it does not seem to account for the difference in sales tax like Kendra said. If you do the trade-in on the invoice, it decreases your Sales & COGS account by the amount of the trade-in. Is this correct? I thought your COGS account only decreased when you actually sold an item.
Re: the sales tax.. The customer does not charge sales tax on his/her trade in because the customer is not in the business of selling cars. He or she is simply using it as a form of payment. So as far as I am concerned it is not appropriate to deduct sales tax based on the value of the trade-in. If your state allows for that then you would create an item for the trade in, make it a taxable item and show it in the body of the invoice as a negative amount. This would have the effect of putting the car into inventory and deducting the invoice total and related sales tax.
Thanks Seth. Brilliant – does just what I need for computer trade-ins…//bruce