How do I record a vehicle trade in with a note and a trade in allowance?

riograndehc1 · ‎October 15, 2018

New vehicle Purchase price $66,576
Trade in allowance $43,000
Note new vehicle $44,234
Payoff old vehicle $20,658

Rustler · ‎October 15, 2018

Keep all the paperwork for your tax accountant, there is a form they fill out for this kind of thing that is different than the accounting entries you make. You need a tax accountant for this one.

In QB

calculate and post partial year depreciation for the old vehicle. If you have not been claiming annual depreciation for the old vehicle, stop here and see a tax accountant - the IRS does not care if you claim depreciation expense annually, but you must calculate what you should have claimed and apply it to this situation.

Create a new fixed asset account, for the new vehicle and and a new fixed asset sub account for accumulated depreciation

Create a new long term liability account for the new note

Then journal entries ( *** means use the account balance for that account in the journal entry, and they need to done in this sequence)
debit accumulated depreciation old vehicle fixed asset account ***
credit old vehicle fixed asset account

debit new vehicle fixed asset account
credit old vehicle fixed asset account ***

If you paid a deposit, enter the payment and use the new vehicle fixed asset account as the expense for the payment

subtract the two notes, 44,234 - 20,658 = 23,576

debit old vehicle liability account, 20,568
credit new vehicle liability account, 20,568

debit new vehicle fixed asset account, 23,576
credit new vehicle liability account, 23,576

View solution in original post

Rustler · ‎October 15, 2018

Keep all the paperwork for your tax accountant, there is a form they fill out for this kind of thing that is different than the accounting entries you make. You need a tax accountant for this one.

In QB

calculate and post partial year depreciation for the old vehicle. If you have not been claiming annual depreciation for the old vehicle, stop here and see a tax accountant - the IRS does not care if you claim depreciation expense annually, but you must calculate what you should have claimed and apply it to this situation.

Create a new fixed asset account, for the new vehicle and and a new fixed asset sub account for accumulated depreciation

Create a new long term liability account for the new note

Then journal entries ( *** means use the account balance for that account in the journal entry, and they need to done in this sequence)
debit accumulated depreciation old vehicle fixed asset account ***
credit old vehicle fixed asset account

debit new vehicle fixed asset account
credit old vehicle fixed asset account ***

If you paid a deposit, enter the payment and use the new vehicle fixed asset account as the expense for the payment

subtract the two notes, 44,234 - 20,658 = 23,576

debit old vehicle liability account, 20,568
credit new vehicle liability account, 20,568

debit new vehicle fixed asset account, 23,576
credit new vehicle liability account, 23,576

riograndehc1 · ‎October 15, 2018

Ok that helps a little but i did a section 179 on the old vehicle last year so at this point there is no difference in the accum and asset to record. How do I take that into consideration?

Rustler · ‎October 15, 2018

You need a tax accountant. Since you took the total value as section 179, and got rid of the truck before its life was over, some of that 179 deduction no longer counts and has to be recaptured as income.

And section 179 should still be entered on the books

pmfastner · ‎October 15, 2018

Rustler, your entry doesn't take into account the trade in allowance.

Rustler · ‎October 15, 2018

that allowance is not part of anything, it is like when you buy a widget, each they sell for $1 but if you buy 100, the price each is 0.50. You enter what it costs you

randall · ‎October 15, 2018

I followed these instructions exactly, but in the end the balance in my new vehicle account does not equal the price paid for the vehicle. Shouldn't it equal?

KingAcct · ‎October 15, 2018

after following the steps, the new fixed asset account is incorrect. The traded in truck accounts are correct (fixed asset, acc depreciation & liability all zeroed out) and the new asset note account is correct. How do i get the new fixed asset account to be the right amount? Currently short 14k

jdruston · ‎April 29, 2020

Hello, I have quickbooks desktop, we sell used vehicles and on occasion with take a trade in vehicle, how do I set the trade in vehicle account up? for example someone buys a used vehicle for $5000 we give a trade in allowance of $1000 subtotal $4000 plus tax? Thanks, please email me at [email address removed]

MJ Warren · ‎April 30, 2020

following the suggestion above - just need to know what numbers to plug in for

debit new vehicle fixed asset account

credit old vehicle fixed asset account***

would the numbers be the value of the new vehicle

MJ Warren · ‎April 30, 2020

question - what numbers do I put in for

"debit new vehicle fixed asset account

credit old vehicle fixed asset account***

would the number be the current value of the new vehicle.

THanks.

SMH43 · ‎June 24, 2020

How would I record a vehicle purchase as below?

price of vehicle - 25000

Service Fee - 100

Factory Rebate - 1000

Note - 24100

Pabz_L · ‎June 24, 2020

Hello there, @SMH43.

You can create a journal entry to record the purchased vehicle transaction in QuickBooks Online.

Here’s how.

Go to the + New button
Under OTHER, select Journal entry to record this transaction.

Please seek advice to your accountant so that you’ll be guided with the correct account to use when creating a Journal entry.

You may also use this article for your future reference on setting up a loan and on how to record the money you got from the loan. Set up loan in QuickBooks Online.

Please leave a comment below if you have any other questions. Have a nice day!

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How do I record a vehicle trade in with a note and a trade in allowance?