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.
   
2. Create an inventory item to represent a default trade-in item. You'll use this item when recording sales which include a trade-in to deduct the trade-in value from the sale price.
   • 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 trade-ins.

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

You can then enter an invoice to record the sale.

• 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 amount the customer needs to pay, and
• deposit the value of the trade-in into the Trade-in Clearing account.

When you receive a trade-in, you're effectively buying that item from the customer. Here's how you can record that 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.
   • In the Supplier field, select the supplier card you created for the customer.
   • Select the trade-in item in the Item Number field.
   • Enter the trade-in value in the Price field.
   

Recording this purchase will account for the receipt of the trade-in item.

You can now close the bill using the funds which were allocated to the Trade-in Clearing account when you recorded the sale.

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.

Recording this payment will:

• close the bill, and
• clear the balance of the Trade-in Clearing account.