OK Say I traded a computer for similar model with a list price of $5,200. The dealer allowed me a trade-in allowance of $1,000. THE DIFFERENCE WILL BE ROLLED INTO THE BALANCE DUE THE BANK ON THE OLD COMPUTER NOTE BY SIGNING A NEW Notes Payable. The new computer has a useful life of 48 months and a residual value of $400. How do I journalize this the the perpetual format?
Thanks

Well, first there's no "perpetual" method here, and it's not inventory. It's a plant asset. The depreciation of the new computer is not relevant to this entry either.

You need to catch up the depreciation on the old computer to date first. (Assuming it's not fully depreciated already.)

You then need to reverse out both the cost of the old computer and its associated accumulated depreciation. Remember that the difference between those two numbers is its book value.

Since you are creating a new notes payable, I would remove the old one off the books and then make a new one for the new loan amount. Since you're rolling it into it, not sure how important that is. Technically if it's a new loan, it's a new loan. But not that big of a deal.

The difference between the book value of the old one and the $1000 trade-in is your gain or loss. If it's a loss, debit it. If it's a gain you can't record it. Instead you will reduce the $5200 by that gain. So if it's a loss, your new computer will be $5200 cost. If say you have a $100 gain, then you record the cost at $5100 instead.