@MichelleMM1
Just to confirm: you have fully depreciated the truck and the sale price to your vendor is below the original cost? If that's the case, you need to recognize all of the depreciation recapture as income in the year of the sale and because it was fully depreciated, it's all depreciation recapture. You cannot defer income as you would in an installment sale. Therefore, you will need to do the following journal entry for the sale:
| | Debit | Credit |
| Accumulated depreciation (should equal original cost of truck) | XXX | |
| Note receivable | XXX | |
| Truck (to remove from books) | | XXX |
| Gain on sale | | XXX |
Then, you can create a bill credit each week/month for the principal and interest income portions of the "payment". Then, apply the credit to the vendor's bill. This will reduce the note receivable by the principal amount and book the interest income.
