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Post Info TOPIC: accounting for part exchanges
JudyBook


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accounting for part exchanges
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I am new to The Book-keepers Forum.  I hope someone out there has the wisdom and patience to help me account for part exchanges.

My client is an agent for a brand of boats.  The usual practice is to invoice his customer for the sale of a new boat, straight forward enough.  However, sometimes he sells new boats in part-exchange for his customer's old boat, and then goes on to sell the second-hand boat he has taken in part exchange.

Year after year I battle to account for the part exchange, especially when it is unsold at year-end (stock)

I am sure there is a straight-forward routine or method I should be following, but so far I haven't worked it out.  Can anyone help me see the light?idea

idea

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JudyBook
Julie


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Hello,

Before venturing off into the world of self employment, I used to work for a forklift company who bought and sold, can you guess .....

This is what I used to do - example

Sale of FLT   £5000
Less Part Ex £1000                                                

Net Amount                  £4000
VAT                          700

Total Invoice Amount     £4700

Then place part exchange item into Stock at the value of £1000

If you then sell the item later on for say £3000 then you have made a £2000 profit. If left on stock after the year end, the accountant would decide upon its depreciation %  and its stock value would be amended accordingly.

Hope this helps ??
Julie



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