I am new to The Book-keepers Forum. I hope someone out there has the wisdom and patience to help me account for part exchanges.
My client is an agent for a brand of boats. The usual practice is to invoice his customer for the sale of a new boat, straight forward enough. However, sometimes he sells new boats in part-exchange for his customer's old boat, and then goes on to sell the second-hand boat he has taken in part exchange.
Year after year I battle to account for the part exchange, especially when it is unsold at year-end (stock)
I am sure there is a straight-forward routine or method I should be following, but so far I haven't worked it out. Can anyone help me see the light?
Before venturing off into the world of self employment, I used to work for a forklift company who bought and sold, can you guess .....
This is what I used to do - example
Sale of FLT £5000 Less Part Ex £1000
Net Amount £4000 VAT 700
Total Invoice Amount £4700
Then place part exchange item into Stock at the value of £1000
If you then sell the item later on for say £3000 then you have made a £2000 profit. If left on stock after the year end, the accountant would decide upon its depreciation % and its stock value would be amended accordingly.
