New Member with Question on "Used Items For Sale"

[Jhalemusic]

Hello,

I am new to the group and operate a small retail music instrument business. For the most part I purchase new items from manufacturers, hold them in inventory and sell them on a retail basis. I do the " purchase order, receive item, pay bill, cash sale" process. The items I buy from manufacturers are set up as inventory items. This works fine.

I have the following questions regarding purchase and sale of used merchandise.

Straight purchase of used merchandise.
- Do I set these up individually as inventory items?
- How do I get the items entered without issuing a PO?

Accounting treatment/process for "trade in" merchandise
- How is the "trade in" entered on a Cash Sale Invoice?
- What is the proper method for establishing a cost for the item traded in?

Thanks for helping me with this

[Joey]

How do you set them up? Do you want to track them as inventory items? Do you need to see the same markup and sales info for them as your new inventory items? If so, then yes you do. If not, then set them up as non-inventory items.
The non inventory item would be linked to your CGS purchases account directly. Call it TradeIn. When you do your cash sale for an item you sell, on the last line, use this item as a minus amount. That will put it into your CGS and reduce the amount due from the customer.
If you're just buying it outright, use Write Checks and charge the check to the Purchases CGS account.
Your cost basis is the amount you gave the customer for it or the amount that you wrote the check for.

[Jhalemusic]

Thanks!! I will give this a try

Jeff