Traded in a vehicle with a loan. Loan was paid off and new loan issued for new vehicle.

Schol

How do I set up this transaction in Quicken 2017 for windows.

Tom Young

Here's one way of doing that. 

Sell the old vehicle.  The sales price of the vehicle would be the sum of the amount of loan paid off plus whatever the dealer credited you, (if any), for the old car against the cost of the new car.  You'll have a gain or loss resulting from the difference between the "selling price" and whatever value you were carrying the car at.  Plus you'll have "excess" cash in your bank account the the amount of value the dealer allowed for the old vehicle. 

This would be a split entry in your Old Car Account as follows:

• Debit (increase) Checking Account    $Y,YYY  (The amount allowed as trade in)
• Debit (decrease) Old Car Loan           $A,AAA (Loan principal paid off)
• Credit (decrease) Old Car Account     $B,BBB (Carrying value of old car)
• Debit or credit as appropriate Gain/Loss Sale of Old Car Category  $C,CCC

You know $Y,YYY, $A,AAA and $B,BBB, so $C,CCC is what "falls out" as the difference.

Then buy the new car.in the "new car" Account using a split transaction.  The accounting entry in Quicken is:

• Debit (increase) New Car Account $XX,XXX
• Credit (decrease) Checking Account        $Y,YYY
• Credit (increase) New Car Load Account $ZZ,ZZZ (New principal amount)

$XX,XXX = $Y,YYY + $ZZ,ZZZ

The dollars coming out of the checking account gets your cash in bank properly stated.

Sherlock

It's usually best to implement the transaction that occurred:  There should be a transaction used for purchase of the new vehicle with split entries for the full cost of the new vehicle (with the value as a transfer to a new asset) and the payoff of the old loan (transfer to close the loan), reduced by the trade-in value old vehicle (transfer from an old asset) and the amount of the new loan (transfer from the opening balance of the loan).

Tom Young

@Sherlock

You still need to recognize some gain or loss on the trade in. 

The two entries I've suggested can certainly be compressed into one entry, but it's also logical to think about it as two entries and enter enter them accordingly:

What are you getting?  A liability goes away and you have a "credit" amount that you can apply to a new car.  There's your "sales price".  Subtract whatever value you have on your books for the old car's value, and you have your gain or loss.

Then your "credit" plus your new loan equals the purchase price of the new car.

Sherlock

@Tom Young  

I did not see your response when I posted mine.

I agree with you.  Using one transaction for the sale of the old vehicle and another transaction for the purchase of the new vehicle is a better approach.  

I do prefer the split transaction for the purchase be entered in the payment account as there tend to be additional expense entries associated with the purchase.  For consistency, that leads me to entering the split transaction for the sale of the vehicle in the payment account.  I do not have direct transfers between loan and asset registers.

The gain/loss on the sale of the old vehicle is apparent in the asset account.

Schol

Thank you for all the comments. I think I figured out how to get the accounts to reflect the proper amounts. I understood the accounting part, just not the mechanics of Quicken to have the new asset and loan properly reflected. Thank you again for the help!