Customer trade-in with an existing balance

PurpleMaple · ‎May 21, 2024

I have a customer who is trading in their used golf cart for a new one. They financed the old golf cart, and still have a balance due. We want to apply part of the trade in value to the amount they still owe from the first one, and the remaining balance will go to their new cart. What would be the best way to show this on one invoice?

Rainflurry · ‎May 21, 2024

@PurpleMaple

Here's my $.02. I would have two separate line items for the trade-in and loan payoff:

1) For the trade-in, enter the full amount of the trade-in value entered as a negative amount using an item assigned to an asset account or an inventory item.

2) For the loan payoff, enter the amount of the payoff as a positive amount using a service item assigned to a liability account.

That will put the trade-in on your balance sheet as an asset/inventory item and the loan payoff as a liability since you owe it to the lender. Let's say the new cart costs $10,000, the trade-in value is $5,000 and the loan payoff is $3,000. The invoice would look something like this:

New Cart	$10,000
Trade-in	-$5,000
Loan payoff	$3,000
Total Due	$8,000

View solution in original post

Tori B · ‎May 21, 2024

Good afternoon, @PurpleMaple.

Thanks for taking the time to reach out to the QuickBooks Community. I hope you're having a great day so far.

In the past, we have seen where customers will use a Journal Entry to record a trade-in. As an example per one of our champion users:

If you increase the old loan payoff amount, you will need to increase the gain.
Offset the difference to gain.
Debits and credits need to be equal.

Debit Credit

New golf cart $

Loan Payable (Old Loan) $

Accumulated Depreciation $

Old golf cart $

Loan Payable (New Loan) $

Gain on Sale of Asset $

However, please keep in mind it's always best to consult with your accounting professional before making any changes to your account. Your accountant can advise the best way to handle the trade based on your business needs. If you don't have an accountant, don't sweat it. You can find one here in our Resource Center.

For more information about recording Journal Entries, check out Create a Journal Entry in QuickBooks Desktop.

Don't hesitate to let me know if you have any additional questions or concerns. Take care!

Rainflurry · ‎May 21, 2024

@PurpleMaple

Here's my $.02. I would have two separate line items for the trade-in and loan payoff:

1) For the trade-in, enter the full amount of the trade-in value entered as a negative amount using an item assigned to an asset account or an inventory item.

2) For the loan payoff, enter the amount of the payoff as a positive amount using a service item assigned to a liability account.

That will put the trade-in on your balance sheet as an asset/inventory item and the loan payoff as a liability since you owe it to the lender. Let's say the new cart costs $10,000, the trade-in value is $5,000 and the loan payoff is $3,000. The invoice would look something like this:

New Cart	$10,000
Trade-in	-$5,000
Loan payoff	$3,000
Total Due	$8,000

JessT · ‎June 06, 2024

Hi Rainflurry!

Hope you're having a great evening! Thank you for sharing your insights on how to track the OP's trade-in situation in QBO. This will surely help other users as well. Have a good one!

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Customer trade-in with an existing balance