Recording trade-ins

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You can use AccountRight to record trade-ins made to your business. Before any trade-in can be recorded, you'll need to setup your company file with a clearing account that 'holds' the value of the trade-in, as well as create a new inventory item to help you move the trade-in amount into that clearing account.

For more information on setting up your trade-in clearing account, see our page on Setting up accounts. Select the Asset tab from the Accounts List, and Bank as the account type. And remember to give it an easily identifiable name, like Trade-in Clearing Account.

For more information on setting up a new inventory item, see our page on Creating items. When setting up this item, select the I Sell This Item option because you'll want to include it on your invoice. In the Income Account for Tracking Sales field, enter the clearing account you created. If you receive any warning messages regarding the type of account selected, click OK. Finally, click the Selling Details tab and enter the relevant Tax Code When Sold.

Now that your company file is set up, you're three easy steps away from accurately recording the trade-in item. These steps will have you deduct the value of the trade-in from the sale and deposit it into the clearing account, and then use that account to pay the bill for the purchase of the trade-in item.

1. Record the sale Invoice that includes the trade-in deduction

Go to the Sales command centre and click Enter Sales.
Select the Customer's Card.

If a Customer Card has not been created, you must create one before recording the trade-in. For more details, see our page on Adding a customer.
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 window below shows a sample Invoice with the trade-in deduction.

2. Create a Bill for the purchase of the trade-in item

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.

3. Close the Bill for the trade-in item

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.