Before recording a trade-in, there's a couple of things you need to do.

1. Create an asset account with the Account Type set to Bank. This account will be used as a clearing account to hold the value of the trade-in.
   Here's our example:
   
2. Create an inventory item to represent a default trade-in item. You'll use this item when recording sales to deduct its value from the price of the item being sold.
   • Select the option I Sell This Item
   • For the Income Account for Tracking Sales, select the asset account created above (ignore the warning about this account usually being an income account)
   • On the Selling Details tab, select the relevant Tax/GST Code When Sold.
   

You're now ready to record sales which include the receipt of traded-in goods.

If the trade-in is from a new customer, create a customer card for them.

You can then enter an invoice to record the transaction.

• On the first line, enter details of the item being sold.
• On the second line:
  • enter a negative one (-1) in the Ship field
  • select the Trade-In item created earlier
  • enter the trade-in value in the Price field

Recording this sale will:

• deduct the value of the trade-in from the sale price, and
• deposit the value of the trade-in into the Trade-in Clearing account (which is the linked account for the Trade-in Item).

When you accept a trade-in, you're effectively buying that item from the customer. So each time you accept a trade-in, complete the following steps to record the purchase.

1. Create a supplier card for the customer. This will allow you to select this supplier when recording the purchase.
2. Create an inventory item for the trade-in item.
   • Select the option I Buy This Item. Depending on what you do with your traded-in items, you can also select I Sell This Item and I Inventory This Item.
   • Select the applicable Expense Account for Tracking Costs.
   • On the Buying Details tab, select the relevant Tax/GST Code When Bought.
   
3. Enter a bill for the trade-in item.
   • Select the supplier card you created for the customer.
   • Use the Item layout.
   • Select the trade-in item in the Item Number field.
   • Enter the trade-in value in the Price field.
   

 Recording this purchase accounts for the receipt of the trade-in item. You can now "pay" for this bill as described in the next task.

The funds that were allocated to the Trade-in Clearing account earlier are used to close the bill.

On the Pay Bills window:

• Select the Pay From Account option and select the Trade-in Clearing account.
• In the Supplier field, choose the supplier card you created for the customer. Their open bill will be listed.
• In the Amount field, enter the trade-in value.
• Apply this amount against the bill.

1. 
   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.