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Journal entry for used auto sale involving trade-ins
After the fact accounting for used car dealer. Dealer sells an auto for $10,000.00 takes a trade of $5,000.00. Is the journal entry $10,000 sale, $5,000 purchase and $5,000 A/R? Dealer was paid $10,000.00 in cash and trade.
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You need to know what accounts are to be used in this question. That being said you will have a Debit to Cash for $5,000 a Debit to whatever account is used to record a purchase like Inventory and you will have a Credit to Sales Revenue for $10,000
Also you will need to account for the cost to the dealership of the car being sold and your entry will be a Debit to Cost of Goods Sold and a Credit to Inventory for the cost of the vehicle. |
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