Did you recently buy an asset and you trade it in another one?
And you're wondering, how do you enter that into QuickBooks?
You are in the right place. Hi, I'm Candus Kampfer.
And I love to help business owners and bookkeepers create confidence
with QuickBooks, are you ready to dive in to how to enter this
in to QuickBooks now, this video is for desktop users. If you are
an online user of QuickBooks go above or down below and we will
link the other video for you. Alright, so let's dive in.
I'm going to share with you how I outlined it first, on a document
so that have all the details, and I'll show you how to do it
actually inside of QuickBooks. So let's start here with what is
the details that we need to get together, I like to outline it
on a document or something like this, just so that it makes it
so much easier. I have both a Google Doc and a Google sheet
that I put it together on. So first, when you're looking over
here, you're going to see, you need to get together what was
the cost the total purchase. Now, quick disclaimer, I am not
a tax special, I cannot give you tax advice. But I'm going to do
my best to give you the data points you need how to do it in
QuickBooks, but I will say that you're probably going to need to
reach out to your tax specialists for a few details
that you need to decide on. And I'm gonna tell you what those
ones are. Okay. So first get together, what was the total
cost of the new purchase. This is a Ford that was purchased in
this example, this example actually came from one of our
competence QuickBooks alumni. And I thought I would share it
here with you as well. So that's where these data points come
from. So first, you're going to want to make sure you know the
value of the asset that you're purchasing the total cost. Next,
you're going to want to know the allowance, this is going to come
from your dealership that you traded it in, in this example,
they're purchasing a Ford and selling a ram. I don't know all
the data points on every everything they bought. But
we're just summarizing the fact that they did give me the next
thing that you know is that they had a loan, and they added that
little bit of interest. So this is the total amount to pay off
the loan. So the way this works is your trade in value or your
equity is what was the amount that they gave you for the
trade. And what's it going to cost you to pay off your loan,
that's where this math comes from, we'll use it later. If you
actually put money in for a down payment, you're gonna need to
add that in. In this example, they didn't have that because
they used a vehicle as the treating you may. And this is
we're going to talk with your tech special, if you have taxes
and other fees, they may want to expense it. So this is a big tip
that a lot of people don't know, when you buy an asset, you do
what's in accounting called capitalize it, you put it as a
fixed asset. And then over the life of that vehicle, depending
on how you want to depreciate it, another great thing you'd
want to talk to your tax professional about, I will tell
you, if you need a how to tutorial for depreciation, you
go up above or down below, we'll also link that for you. So we're
going to be depreciating the asset, if we put it in as a
fixed asset or capitalize it. So that's something you're going to
need to know. So when you're deciding if you're going to
capitalize or not one of the facts you may be deciding, do I
want to write off the fees right now and expense them this year?
Or do I want to add them to the total cost of the vehicle
depends on how you're depreciating it. Alright, so
let's jump back over and look at this when you're in the original
purchase. So now we're talking about this was, what do we do
with purchasing? That's all this section. Now we're gonna go back
and say, okay, that RAM, how are we gonna remove that out of
QuickBooks because we sold it, we traded it in, we don't need
it in QuickBooks any longer. So first, we find out what was the
total value we have in QuickBooks, minus what we've
been depreciating on that asset. And that gives us what's called
a book value for the RAM. Then down here, you're going to take
another piece of the puzzle is, what was the trade and allowance
minus that book value that we just got here, pops it right
there, subtract that out, and that gives you typically was a
gain or loss on asset. Now I want to give you another little
tip that you don't wanna talk to your tax professional about.
Typically, if you're just buying one asset and then selling it,
you either have a gain, you made money on it, or you had a loss,
you lost money, when you're actually trading it in, what
typically happens is it actually reduces the new vehicles. asset
value, the amount that you can capitalize, we have to subtract
off the gain or the gain or loss of the asset that you got rid of
check your tax special, make sure that's what they want you
to do. But just know that's how we're going to be applying this
one. So when we start thinking about actually moving all that
into a journal entry, here's a little summary that I've put
together to make it easy for you. First, purchase price.
That's what we're going to debit, we need to know the trade
in value, and we need to know what the loan was the loan
amount, we're actually going to come over here and subtract it
later. But to be able to get the equity we take the I said this
before, but it's one tell you again, the trade in value the
27,000 subtract out the full amount we owe on the loan
including interest. And that gives us the 9001 8649. Okay,
you need to know that amount. Now, that's not exactly what the
asset value is because there's some other differences in the
math, but the next thing you want to know is the 69,000. So
that's where this eight 9000 matters, is because you're
taking that that the cost of it minus that 9000 that they're
giving you as value and that is where you get your loan amount.
Okay, so that's why that math matters. So then that's where we
get the loan here, the asset is going to be what we got from
QuickBooks, we're going to subtract out the depreciation
that's here. And that's going to give us our value of the book
value. Okay, based off the math difference between this and
this, we get the 12,000. All right, so the 27,800 minus the
book value gives you the 12,008 78. For two, let's put it
into QuickBooks Are you ready many different pieces of the
puzzle, first thing we want to go to is over here under list,
go to your chart of accounts. This is where we're going to set
up all of your different assets and your loans, you're gonna go
down to the bottom, I'll take my face off, so you can see it,
well go down to the bottom to account, click Add New, if you
don't know how to add it. To add your assets, you're going to do
a fixed asset, click Continue and enter the data I've already
set it up. So I'm going to save a little time. So I'll show you
how to do that. And then if you need to set up a loan, if it's a
long term loan, meaning it's going to be longer, if you do
loan here it does, they typically does like line of
credit, or loan, which is current what you want as long
term. So you're gonna drop it down to this one when you go to
set up your loan. Okay, so I've already set them up, just to
save us a little time, you are going to see a few things one,
you're going to want to set up your Ford, I personally like to
do original cost separate so that it gives me all the details
I want. You'll notice with the RAM, we can see the 14,000,
which matched our number and the 24,009 2158 and the 10,000. So
24 minus 10 gives us 19. If you make these sub accounts, it'll
keep do the math for you. Depreciation is a contra
account. So it's a negative number, it's reducing your
overall asset. That's why it becomes 14. And then down here,
you'll see our loans already set up, I set up a new loan for the
Ford, which we'll be doing in a little bit, when I do the
journal entry, we'll be adding, and I set up the loan for the
ram here to reduce it. Okay, so the old vehicle the loan, if you
have one, and the asset value should already be in your
QuickBooks, what we're going to do is take those out and add in
the new purchase. To do that we're going to do a journal
entry. I rarely recommend them. But this is one of those cases
that you can do it. So we're gonna go under Company, Make
General Journal Entry perfect. If your says adjusting, you can
take that off. If it doesn't say it, don't worry about it, we are
going to do this transaction as of 525 25, but you're going to
want to do it on the date of the purchase of the new assets. So
we're going to start here. And remember when we're looking at
depreciation, alright, so we're going to use this journal entry,
I put it down here, so you can easily see it, we're going to
just start, I recommend you print it out and actually have
it next to you. So we're going to start with the Ford, the new
vehicle, we're gonna go down, we're gonna put under our
original cost, because we're adding it there. So we can have
a sub accounts, you don't have to do that, that's totally up to
you. It's just something I personally like to do, we're
going to add the asset as a debit. Next, we are going to add
purchased Ford and the last digits of that VIN number, trade
in RAM. And then if it has the VIN number as well, if you want
to put in I like to do on the first one because it'll add it
to each one you'll see if you want to add the vendor which you
spent or purchase the asset from you can Alright, let's go ahead
and go to the next one, which is the trade and we're going to
skip, I want to come back to how we do the math difference on it.
But we'll come back to that later on the trading of the Ford
will do that's the last part of the transaction. Next, we are
going to go and do the new loan. So we'll go ahead and do loan
the Ford make sure that setup if it's not, you can add new
directly from here in side entry. Now if you're not
familiar with debits and credits, so because we're adding
asset, we're debiting a loan is a credit balance, we'll actually
add a link up above and down below, where you can download a
cheat sheet on how to do journal entries. I don't recommend them
very often. But if you're going to do them, let's do them.
Right, so I'll give you a little quick cheat sheet that you can
get more information about. So we're gonna go and add the loan
that'll just show you debits and credits, kind of like a link T
account that you can use. Next, we will do the RAM. So just
looking at that little tracker and you're putting piece by
piece in. So with the RAM, we're actually going to remove it. Now
if you go straight to the original main account and you
don't use a sub account, it won't remove it properly. So
make sure you're choosing the one you want. And because Assets
increase with a debit, we will go ahead and credit that for the
amount of 24,009 2158 We're just entering the data that we
already did. We did all the upfront harder work when we were
doing the math initially. Next we are going to go and do our
depreciation for the RAM. And that's why kind of you'll see it
here but I like to put it kind of at the end too, just to make
it easy because depreciation increases with a credit we will
be debiting this one for the amount that we want to remove.
Next we'll do the RAM loan. So First, we added the new asset
and the new asset loan, now we're removing the old asset,
just kind of putting it in that order makes it clean and easy to
remove the. And don't worry if your math while you're adding
it, it's like trying to put these numbers automatically and
you'll see numbers are propping them in and then I'm changing
it. It's because it's trying to help me do my math all the time.
See that? All right, so the next thing we need to do is interest
expense. If you don't have one setup, I like to do interest
expense even though it says it over here, just to make it even
easier. Okay. So now we have entered everything, we've added
the new asset, both the asset itself and the loan, we've
removed the old truck asset, the depreciation and the loan, added
the interest expense because it was paid when it was purchased,
the new asset was purchased. So the last line that we have is
where that asset is. And typically, when we're doing
this, the way that assets work is you're buying and selling
maybe one piece of equipment, and you just have a gain or loss
depending on how your money works. But in this example,
we're actually reducing that new asset value, because we mixed
them all together. And that's why it might be SMART Check with
your tax professional to not do necessarily a trade in which
you'll know for in the future, because you're probably watching
this after the fact but know that it might be smarter just
depends on the value that they're giving you as a trade in
versus just selling it. But if you separate them, you get the
full value on the original asset. That is what my tax
professional recommends. But you check and see with yours, okay,
as I said, I'm not a tax professional, I can't give you
advice, but I'm just giving you what I know. So then the last
one is going to be that Ford truck, we're going to go back to
the original and we're going to reduce it for the trade in
value. And this is going to be your map difference. I do
recommend that you keep all your details, you can attach it here,
if you'd like you're going to go ahead and click Save and Close
can click okay, we're not going to worry about the tracking the
fixed assets right now. We don't have to have classes set up. But
that's okay. Now we're gonna go into we'll look at what
happened. You'll see you have your truck right here. And you
have the original. And it's the difference. If you open it up,
it's the purchase minus the trade in value. So it's very
clear that there are two different things, then you have
the RAM and it zeroed out and all your accounts are zero. So
what you're going to want to do with these is you're going to
want to make them you right click and make them inactive or
income down here and click Make Inactive and it will make them
inactive. Now what a lot of people think that means isn't
there just deleted, you actually click this little button down
here it says include inactive, everything you've ever made
inactive will still show up. So we'll go ahead and right click,
you just want to make sure getting rid of the ones that
you'll no longer use. While you're in there, you can clean
up other accounts as well. Now we're going to come down we're
gonna look at the loans, the ram loan is now zeroed out. And so
we can make that one you can either right click or go down
below and make it inactive. And now we just have the correct
loan of what we owe on the Ford itself. So we've removed the RAM
completely. And we've added the Ford details in the value of the
asset. No depreciation yet, because we haven't heard
depreciate yet. But we also have the loan now can start paying
the loan down as well. If you're looking for depreciation video,
we'll link it up above and down below. If you need the journal
entries cheat sheet, check that out up above or down below as
well. And let me know did this help you in the comments I'd
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out to email, you can register to get those as well. Thank you
for being here. I hope this video helped you. Go enter in
your trade and value. If you find that after watching this
video like oh my goodness, I need to go back and re watch it
do that. That's why I put it here for you. You can speed it
up with the wheel or you can slow it down. Take notes. Start
with getting all of the data you need because it will make the
journal entry side of it so much easier. Thank you for being
here. I look forward to seeing you inside my next video. Have a
great day. Bye