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Accounting for Part-Exchange Vehicles


#1

The following guide explains a common method for handling vehicle sales in conjunction with a part-exchange. The guide is intended for those in the motor trade.

1. Garage buys a vehicle for resale and pays £3,000:

Log the purchase of vehicle as a purchase invoice, you can also create your own custom category such as ‘Vehicle Purchases’ or you can use the existing category ‘General Purchases’:

2. Garage then sells the vehicle for £5,000:

Enter the sale of the vehicle as shown below:

3. As part payment the garage accepts a part-ex of the client’s vehicle, let’s say that’s £1,000:

Log the part -ex vehicle on a separate purchase invoice:

BANK ENTRIES:

  1. Create a new bank holding account, called ‘Part-Ex Holding Account’:

  1. Log the payment for the invoice of £5,000 (Invoice #000001 in the example above) to the ‘Part-Ex Holding Account’:

  1. Pay the purchase invoice of £1,000 (#QF0002 in the example above) for the Part-Ex Vehicle to the same ‘Part-Ex Holding Account’

  1. Tag the sales proceeds of £4,000 received into the Business Account i.e. the payment for Invoice #000001 in the above example, as a transfer to the above holding account:

The balance on the ‘Part-Ex Holding Account’ is now £0.00:


Accounting for part-ex vehicles