I sell machines but accept trade in of old machines.

Day 1 - sold new mach at $150 but allowed trade in of old mach. Buyer paid $70 after trade in of old mach
Day 5 - sold old mach that was traded in at $60.

How should I record the 2 sales transactions?

YES, you should record both transactions.

DEBIT Cash Account $80
DEBIT Trade-in Machine Account $70
Credit Sale of New Machine A/c $150

Being sale of new machine partly for cash and partly trade-in.

______________________________

DEBIT Cash Account $60
DEBIT Loss on Sale of Trade-in A/c $10
CREDIT Trade-in Machine A/C $70

Being sale of traded-in machine.

Is selling machines what you do? i.e. is this inventory to you?

Thank you!

Quote:

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Originally Posted by morgaine300

Is selling machines what you do? i.e. is this inventory to you?

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Yes, machines are my inventory

Then this is treated as purchases and sales of inventory and a machine account is not involved, nor is a loss. i.e. it's an inventory account rather than a plant asset.

I'm not positive if there's anything you have to do with trade-in's of that sort. But it seems you got $150 of value - $70 in cash and therefore what you consider $80 worth on a used machine, which is inventory. And then $150 of sales.

This wouldn't really be any different than if you got all $150 for the sale, and simply used $80 of it to buy the used one to put into your inventory. If you did anything to the used one in order to put it in a better selling condition, you should be able to count that as part of your cost.

When then re-selling, it's another sale, at $60. And $80 coming out of inventory and going into COGS. Yes, you lost, but losing on merchandise selling isn't a "loss" account. It'll affect your overall gross profit in the long-run.