I have a customer who is trading in their used golf cart for a new one. They financed the old golf cart, and still have a balance due. We want to apply part of the trade in value to the amount they still owe from the first one, and the remaining balance will go to their new cart. What would be the best way to show this on one invoice?
Here's my $.02. I would have two separate line items for the trade-in and loan payoff:
1) For the trade-in, enter the full amount of the trade-in value entered as a negative amount using an item assigned to an asset account or an inventory item.
2) For the loan payoff, enter the amount of the payoff as a positive amount using a service item assigned to a liability account.
That will put the trade-in on your balance sheet as an asset/inventory item and the loan payoff as a liability since you owe it to the lender. Let's say the new cart costs $10,000, the trade-in value is $5,000 and the loan payoff is $3,000. The invoice would look something like this:
| New Cart | $10,000 |
| Trade-in | -$5,000 |
| Loan payoff | $3,000 |
| Total Due | $8,000 |
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