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How to show credit / trade-in JM 10-16-2006
Posted by JM on October 16, 2006, 3:55 pm
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 QB2004 Pro. Non-inventory items. I buy and sell tech parts, and I often
give trade-in value for old parts that I'm replacing.
Under my old Excel/Access system, I would show a sale price of the new item
with a credit for the trade-in on the same invoice. Of course, the invoiced
amount would be the difference.

How would I do this or similar in QB?

Thank you,

jm








Posted by Arno Martens on October 16, 2006, 4:49 pm
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>QB2004 Pro. Non-inventory items. I buy and sell tech parts, and I often
>give trade-in value for old parts that I'm replacing.
>Under my old Excel/Access system, I would show a sale price of the new item
>with a credit for the trade-in on the same invoice. Of course, the invoiced
>amount would be the difference.
>
>How would I do this or similar in QB?
>
>Thank you,
>
>jm

Using QB2000 I create internal and external invoices.

Internal I invoice for the full amount and I receive a bill for the
trade in. (Make a new quick vendor with the same customer name but add
the word SELL.)
In a copy of my QBW file under the same invoice number I list the sales
price and using the same item description with Quantity -1 list the
trade received.

I mail out this "external" invoice and staple a copy of the other two
documents with every of the three documents.
Although that mailed out invoice will disappear with the copy of QBW it
can easily be recreated from the internal ones or the hard copy on file.

Doing it this way has the advantage that you can look at the true cost
of the trade-in for your inventory and your sales will not be
understated.

As they worked with hard copies only I had no problems with Federal and
Provincial tax audits but I would suggest you check with your own tax
offices to see if there are any objections or guide lines.
--
Arno


Posted by HeyBub on October 16, 2006, 8:56 pm
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Arno Martens wrote:
>
>> QB2004 Pro. Non-inventory items. I buy and sell tech parts, and I
>> often give trade-in value for old parts that I'm replacing.
>> Under my old Excel/Access system, I would show a sale price of the
>> new item with a credit for the trade-in on the same invoice. Of
>> course, the invoiced amount would be the difference.
>>
>> How would I do this or similar in QB?
>>
>> Thank you,
>>
>> jm
>
> Using QB2000 I create internal and external invoices.
>
> Internal I invoice for the full amount and I receive a bill for the
> trade in. (Make a new quick vendor with the same customer name but add
> the word SELL.)
> In a copy of my QBW file under the same invoice number I list the
> sales price and using the same item description with Quantity -1 list
> the
> trade received.
>
> I mail out this "external" invoice and staple a copy of the other two
> documents with every of the three documents.
> Although that mailed out invoice will disappear with the copy of QBW
> it
> can easily be recreated from the internal ones or the hard copy on
> file.
>
> Doing it this way has the advantage that you can look at the true cost
> of the trade-in for your inventory and your sales will not be
> understated.
>
> As they worked with hard copies only I had no problems with Federal
> and Provincial tax audits but I would suggest you check with your own
> tax offices to see if there are any objections or guide lines.

Hmm. Wouldn't that make the customer liable for the sales tax on the full
amount?

I'd prefer to treat the trade-in as a "discount" from the original selling
price, thereby lowering the buyer's tax. Heck, he already paid sales tax on
the original item...

Nevertheless, you're correct in recommending a consulatation with the taxing
authority to find the fairest way of handling the transaction.



Posted by Arno Martens on October 16, 2006, 9:58 pm
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wrote:

>Arno Martens wrote:
>>
>>> QB2004 Pro. Non-inventory items. I buy and sell tech parts, and I
>>> often give trade-in value for old parts that I'm replacing.
>>> Under my old Excel/Access system, I would show a sale price of the
>>> new item with a credit for the trade-in on the same invoice. Of
>>> course, the invoiced amount would be the difference.
>>>
>>> How would I do this or similar in QB?
>>>
>>> Thank you,
>>>
>>> jm
>>
>> Using QB2000 I create internal and external invoices.
>>
>> Internal I invoice for the full amount and I receive a bill for the
>> trade in. (Make a new quick vendor with the same customer name but add
>> the word SELL.)
>> In a copy of my QBW file under the same invoice number I list the
>> sales price and using the same item description with Quantity -1 list
>> the
>> trade received.
>>
>> I mail out this "external" invoice and staple a copy of the other two
>> documents with every of the three documents.
>> Although that mailed out invoice will disappear with the copy of QBW
>> it
>> can easily be recreated from the internal ones or the hard copy on
>> file.
>>
>> Doing it this way has the advantage that you can look at the true cost
>> of the trade-in for your inventory and your sales will not be
>> understated.
>>
>> As they worked with hard copies only I had no problems with Federal
>> and Provincial tax audits but I would suggest you check with your own
>> tax offices to see if there are any objections or guide lines.
>
>Hmm. Wouldn't that make the customer liable for the sales tax on the full
>amount?
>
>I'd prefer to treat the trade-in as a "discount" from the original selling
>price, thereby lowering the buyer's tax. Heck, he already paid sales tax on
>the original item...
>
>Nevertheless, you're correct in recommending a consulatation with the taxing
>authority to find the fairest way of handling the transaction.
>

Not here, but that is why I suggested to check with the tax offices in
ones own jurisdiction.
Our GST is akin to but the HST in the Maritime Provinces is a true VAT.
I buy something and pay the tax. I sell the goods and charge the tax.
I remit the difference between charging and paying only; ergo, tax on
the value added amount.
This applies to all of my or the customers purchases or sales during the
reporting period. This way it always only ends up at the difference.

Used to be that Federal tax was paid on the difference but Provincial
Tax on the whole amount.
Provincial Tax I only know the Ontario rules and, except for
Universities or other educational institutions all my customers use the
purchased items to incorporate in or alter goods for resale (metal
working machinery in my case), which makes them tax exempt providing
they sign an exemption certificate. They do not have to be a registered
business to qualify for that PST exemption and it is not the sellers
responsibility to police if the person is entitled to sign such a
certificate.

A few years ago the feds charged GST on the difference if the was a
trade but the Province charged PST on the selling price before discount.
I used to love buying personal cars as I had made a Lotus spread sheet
for my laptop where I could just plug in the Amount (+ extras), and the
trade or the total less the trade and I would get the missing figure.
That took the lead away from the salesman as you only had to change the
trade or the total a little and they were hacking around on their
calculators forever trying to come up with a figure.
Best of course was when giving them the drive away amount because when
they finally had come up with a figure they had forgotten to add in the
Office preparation fee or the $ 10.00 for a transfer of the old or $
20.00 for a new license plate.
Since the Province harmonized with the feds to charge only on the
difference it is easy for them to keep up with you but you can still be
in control if you constantly change the subject every time they are
ready to give an explanation to a previous question.
--
Arno

Posted by HeyBub on October 17, 2006, 12:19 pm
Please log in for more thread options
Arno Martens wrote:
>>
>> I'd prefer to treat the trade-in as a "discount" from the original
>> selling price, thereby lowering the buyer's tax. Heck, he already
>> paid sales tax on the original item...
>>
>> Nevertheless, you're correct in recommending a consulatation with
>> the taxing authority to find the fairest way of handling the
>> transaction.
>>
>
> Not here, but that is why I suggested to check with the tax offices in
> ones own jurisdiction.
> Our GST is akin to but the HST in the Maritime Provinces is a true
> VAT.
> I buy something and pay the tax. I sell the goods and charge the tax.
> I remit the difference between charging and paying only; ergo, tax on
> the value added amount.
> This applies to all of my or the customers purchases or sales during
> the reporting period. This way it always only ends up at the
> difference.
>
> Used to be that Federal tax was paid on the difference but Provincial
> Tax on the whole amount.
> Provincial Tax I only know the Ontario rules and, except for
> Universities or other educational institutions all my customers use
> the purchased items to incorporate in or alter goods for resale (metal
> working machinery in my case), which makes them tax exempt providing
> they sign an exemption certificate. They do not have to be a
> registered business to qualify for that PST exemption and it is not
> the sellers responsibility to police if the person is entitled to
> sign such a certificate.
>
> A few years ago the feds charged GST on the difference if the was a
> trade but the Province charged PST on the selling price before
> discount.
> I used to love buying personal cars as I had made a Lotus spread sheet
> for my laptop where I could just plug in the Amount (+ extras), and
> the trade or the total less the trade and I would get the missing
> figure.
> That took the lead away from the salesman as you only had to change
> the trade or the total a little and they were hacking around on their
> calculators forever trying to come up with a figure.
> Best of course was when giving them the drive away amount because when
> they finally had come up with a figure they had forgotten to add in
> the Office preparation fee or the $ 10.00 for a transfer of the old
> or $
> 20.00 for a new license plate.
> Since the Province harmonized with the feds to charge only on the
> difference it is easy for them to keep up with you but you can still
> be
> in control if you constantly change the subject every time they are
> ready to give an explanation to a previous question.

Yeah, in re-thinking my answer, I conclude that my mad-cow disease was
acting up. The customer is paying the full price - and should be taxed on
the full price - but part of his payment is in merchandise.



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