This support note explains how to handle trade-ins in AccountEdge. The example we'll use is a motor car trader who has received a trade-in.
Setting up your company file to record trade-ins
Before recording any trade-in transactions, you will need to setup:
- a new asset banking account - to be used as a clearing account to 'hold' the value of the trade-in
- a new inventory item - to be used to deduct the trade-in amount from the sale and deposit the deduction to the Trade-in Clearing account
This account will be used as a clearing account to 'hold' the value of the trade-in.
- Go to the Accounts command centre and click Accounts List.
- Click the Assets tab then click New.
- Select Bank in the Account Type drop-down menu.
- Give the account a unique number that suits your account list.
- Name the account Trade-in Clearing Account.
- Click OK. The following window shows the setup of an example Trade-in Clearing account.
This item is used to deduct the trade-in amount from the sale and deposit the deduction to the Trade-in Clearing account (created in the previous task).
- Go to the Lists menu and choose Items.
- Click New.
- Enter an Item Number, such as Trade, and enter an Item Name, such as Trade-in item.
- Select the I Sell This Item option.
- Enter the Trade-in Clearing account in the Income Account for Tracking Sales field - this will be the account created in the previous task in this support note. If you receive a warning message regarding the type of account selected, click OK to this message.
- Click the Selling Details tab and enter the relevant Tax Code When Sold (this will appear as GST Code When Sold on NZ versions)
- Click OK.
The window below shows the setup of an example Trade-in item.
Recording a sale that includes a trade-in
To record a sale that includes a customer trade-in, you'll first record the sale that includes the deduction, then create a bill for the purchase, and finally close the bill for the trade-in item.
After creating a Card for the customer:
- Go to the Sales command centre and click Enter Sales.
- Select the Customer's Card.
- Enter the Invoice # and Date.
- On the first line, enter the Ship quantity of the item being sold, enter the Item Number, Description and Price.
- On the second line, enter a negative one (-1) in the Ship field. Enter the Item Number of the new Item that was setup and then enter the Price, being the value of the trade-in.
- Enter the other transaction details as required then click Record.
The above steps will deduct the value of the trade-in from the sale and deposit it into the Trade-in Clearing account which is the linked account for the Trade-in Item.
The window below shows a sample Invoice with the trade-in deduction.
Before recording the Bill, you will first need to setup a Supplier type Card for the customer, and an Item for the 'thing' being traded in. When setting up this Item, ensure that the I Purchase This Item option is activated and that the relevant cost of sales account (5-xxxx) is selected (You may also want to select the I Inventory This Item and also the I Sell This Item options).
- Go to the Purchases command centre and click Enter Purchases.
- Select the Supplier Card that was specifically setup for the customer.
- Click the Layout button, choose Item and click OK.
- Enter the Purchase #, Date, Memo and the other purchase details.
- Enter the quantity Received, Item Number, and then enter the Price - using the same price as entered for the trade Item on the sales Invoice. Enter this amount as a positive, for example $2500.00.
- Check the transaction then click Record.
The window below shows a sample Bill for a traded-in item.
The Trade-in Clearing account, which was used to enter the trade-in deduction, is used to pay the Bill for the purchase of the trade-in item. This will post a withdrawal to the Trade-in Clearing account, leaving it with a zero balance.
- Go to the Purchases command centre and click Pay Bills.
- Select the Supplier Card that was specifically created for the customer.
- Select the Pay From Account option then enter the Trade-in Clearing account in the adjacent Account field.
- Enter the Memo, Date and Amount.
- Enter the Amount Applied against the Bill for the trade-in item.
- Check the transaction details then click Record.
The window below shows a sample of the Pay Bills transaction. This will close the Bill and clear the Trade-in Clearing account balance.