Corporation Traded up on Vehicle.
CR Vehicle
DR Accum Depr
CR Cost of Sale

How do I enter Trade-in credit allowed by dealer when new vehicle is bought?

joyce1954

I'm not sure where you're getting the account "Cost of Sale." For one, that's generally a category, not an account. And it's also more related to the costs directly related to making sales -- but sales which the company is in business to do. (i.e. they aren't in the business of selling vehicles -- they use it in their business.)

A trade-in credit is also not an account. It's used to figure out two other things. For one, it'll help determine whether you have a gain or loss on the trade in. You're comparing your book value to the trade in allowance, and seeing if you got trade in value higher or lower than book value. Second, it's used to help figure out how much is left due on the trade it.

i.e. The new vehicle is $30,000, you're given a trade-in of $10,000, and you put down $5000 in cash. You have essentially given them $15,000. So you still owe them $15,000.