Serialized Concepts

When you accept trade-ins items from your customer, the system must recalculate the credits and debits for your general ledger. When you sell a machine, the system credits sales, and debits cash or accounts receivable (A/R). However, when you accept a trade-in on the sale, the system divides the debits among three general ledger (G/L) accounts: cash or A/R, trade-in assets, and trade-in discount.

 

Note: You enter the G/L account numbers for trade-ins in the Trade-In G/L Asset and Discount fields in the (EZ1S) Serial System Parameters screen. In addition, you indicate whether trade-ins are taxable in the Tax Trade-In field. For details, see Parameters.

 

The system also debits the trade-in asset account for the trade-in’s book value. If you allow your customer more for the trade-in than it’s actually worth, the difference between the book value and the amount allowed for the trade-in is debited from the discount account. The system then debits the amount that the customer pays from the cash or A/R account.

 

Suppose you sell a machine for $2500, and allow $1000 for a trade-in machine. You specify a book value of $800, which leaves a discount of $200 ($1000–$800=$200). Using this example, the system would post the following to your general ledger:

 

Credits                                     Debits

$2500 to Sales Account              $800 to Trade-In Asset Account

                                                 $200 to Trade-In Discount Account

                                                $1500 to Cash or A/R Account

                                         =     $2500