Part exchange on a vehicle

Hi. I have setup a friend (car dealer) with quickfile.

He’s asked me a question i’m not too sure on.

If he sells a car for say 5000 and he receives a car in part exhange, that he gives the customer £2000 back on, how would he account this in invoices?

I am thinking he invoices for the full amount of the vehicle as a sale of asset, then creates a part exchange holdings account. He then tags a £3000 payment to his bank / card / cash whatever, then a £2000 payment to the "part ex holdings account"
Then create a purchase Order to the customer for £2000 (as motor vehicles[asset]) then pays that out from the part ex holdings account.

Is that the correct way to do it?

Thanks

Mike.

First of all it is not sale of asset
Secondly as part exchange dealer does not have to actually pay £2000 just get £3000 in receipt against invoice of £5000 with £2000 shown as negative figure as line item labelled as part exchange. Once you sell that part exchange car you can book another sales invoice.

OR
Open a bank account, call it part exchange

Book purchase of £2000 and pay it from part exchange a/c and create sale invoice of 5000, mention part exchange as line item with 0 value in sales column. Record receipt of 3000 in normal bank and 2000 in part exchange a/c

Ooh as simple as that.

Ok easy to work with. Thanks :slight_smile: