Customer wants to pay invoices with a trade/vehicle sale

tryansfl83 · ‎January 14, 2021

I'm not sure this is possible but I figured I would ask here first since my accountant is busy with PPP stuff.

We have a customer with about $20,000 in outstanding invoices. His company has been hard hit and he is looking to unload some vehicles and heavy equipment, and we could use one of the vehicles he's selling.

He wants to "sell" the vehicle to us for $15,000 and have that satisfy a portion of his invoices.

I have no idea how to post this. I've created an Asset account for the vehicle, but I have no idea the accounting steps to deduct the $15,000 from the multiple invoices he owes us so that everything posts correctly.

Is this possible? If so, can anyone tell me the steps I'd need to take or point me in the direction of a resource explaining the steps? I searched through the communities and FAQs here but maybe I'm not using the correct phrasing to find an answer.

Thanks!

john-pero · ‎January 14, 2021

Here is a simple way to record the transaction. Start with a customer credit memo that posts $15k to tge vehicle fixed asset account. If you cannot directly post then you can add an Item that does and post to that item in the credit memo.

Once you have c.m. , receive customer payment and apply just the c.m. To transfer title you will have to pay stste sales tax (if any) along with title transfer at your local notary that does vehicles. The tax is added to the basis of the vehicle. Example 6% tax and your asset value is now $15900. Do verify that seller has no open note against it or even though in your driveway it could get repo'd

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john-pero · ‎January 14, 2021

Here is a simple way to record the transaction. Start with a customer credit memo that posts $15k to tge vehicle fixed asset account. If you cannot directly post then you can add an Item that does and post to that item in the credit memo.

Once you have c.m. , receive customer payment and apply just the c.m. To transfer title you will have to pay stste sales tax (if any) along with title transfer at your local notary that does vehicles. The tax is added to the basis of the vehicle. Example 6% tax and your asset value is now $15900. Do verify that seller has no open note against it or even though in your driveway it could get repo'd

tryansfl83 · ‎January 14, 2021

Thank you, that was easier than I expected!

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Customer wants to pay invoices with a trade/vehicle sale