I have a little bit of a head scratcher here:

The company bought a vehicle, drove it for about 2 months and then traded it in for one that served its needs better. I did an initial entry as follows:

Toyota - Dr $18,325.37
Cash - Cr $4,000
Lease - Cr $14,325.37

No payment was made on the vehicle except for the down-payment.

Now I can't figure out the entry for the trade in. How is depreciation handled here? Is there any? There was clearly a loss. But how do I record it all.

Thanks in advance.

Here are the specs:

this is for the Toyota Scion XB

cash price of vehicle $15,583.00
doc fee $45
Sales Tax $1,258.37
optional serv cont $1,279.00
Lice Fees $160
DOWNPAYMENT $4,000
amount financed $14,325.37
finance charge $2,847.23 59 PAYMENTS $286.21

total payments $17,172.60

TOTAL SALE PRICE $21,172.60



Honda Element
beginning 11/29/05

cash price of vehicle $15,565
Doc fee $45
Sales Tax $1,151.24
Service Contract $1,225.00
License fee $155
CA tire Fee $8.75
Downpayment $1,000
finance charge: $4,382.33 72 payments of 299.06
amount financed $17,149.99
Total payments: $21,532.32

Total Sale Price: $22.532.32

trade in of Toyota Scion $11,900