Handling Trade-ins with The Jewelry Shopkeeper
A trade-in is where a customer buys merchandise from your store and
pays (partially or fully) with old goods or materials.
Often the trade-in merchandise is of lesser value than the value of
the merchandise being purchased and the difference has to be made
up with some other form of payment. Sometimes the trade-in
merchandise is of equal value and you agree to an even swap. Other
times the trade-in merchandise is of greater value and the customer
is to be issued cash, check, credit slip or store credit to make up
the difference. In the Jewelry Shopkeeper, any of these types of
sales transaction is handled much like a customer return or
There are three basic types of trade-in merchandise:
1) Scrap gold. The simplest type of trade-in is if the item has
only one type of valuable component, like a man's nugget ring,
and is to be scrapped.
2) Resalable items. If the item is something you will in turn
sell as a finished piece as-is, then you will need to add the
item to inventory and assign it a new sku number. This is very
common for diamonds (since you can't melt them down) but may
also be done with estate-quality jewelry.
3) Trade-in of items you sold the customer. This is handled just
like a returned sale except that you might adjust the trade-in
price compared to the original selling price. Here you just enter
the original sku with a minus one quantity.
Or you might have a combination of the above. The trade-in
might contain some gold that is to be treated as scrap and a stone
which is to be assigned a stock number as a resaleable item. In
this case, record two trade-ins.
Create A Major Class Code for Scrap Items
(Note that is a one time step. Once a scrap gold major class
code(s) is created, you won't have to repeat the step each time a
trade-in is made.)
If you accept scrap, before you begin a sales transaction you must
create a major class code called "Scrap Gold". Use the Enter/Edit
Major Class Codes feature [8-3-1] to create the "Scrap Gold" major
class code. You may want to create more than one scrap gold class
code for different types of trade-ins. For example, you might
choose class 890 for '10 karat scrap gold', 894 for '14 karat scrap
gold' and 898 for '18 karat scrap gold'. Or, to keep things simple,
you may want to create only one major class code for all scrap
Four things are important to remember for the sales transaction.
The first is how the cost and price of merchandise in the scrap
categories is calculated; by piece or by weight. In almost all
cases, even in the case of scrap gold, it's much easier to choose
to value by piece, not weight. You must also remember the dummy sku
number created for this trade-in category. For instance, in the
above example, major class code 890 will be assigned the dummy sku
number '890-00001'. In order for the sale total to come out
correctly, make sure the 'Charge Sales Tax' question is entered as
N for No.
If you pay commissions, be sure to enter the commission percentage
as zero and answer the question "Does this Override Sales Clerks'
Commissions?" with a Y for Yes. This will ensure that clerks don't
get negative commissions on trade-ins of scrap.
Make sure the question "Option to add inventory on sales screen?"
is answered with Y. This option is located in Store Information
Defaults [8-8]. This is a one-time only step and won't have to be
reset for future trade-ins.
How to Record a Scrap Gold Trade-in
1. Make a new sale. In most cases the Enter Cash/Charge Account
Sale feature [1-1] should be selected. If the trade in is of
greater value the item purchased and you want to credit the
balance to a customer's in-house charge account, be sure that
the customer has an open charge account and that you select
Yes when the question Is this sale a Store Charge? is
Continue through the sale as usual, entering the sale date,
department and sales person's initials, until you are prompted
for a sku number.
On the first sku number entry line, type the sku number, final
selling retail price and quantity of the item the customer is
purchasing. The quantity will be entered as a positive number
2. On the second line, type the scrap gold dummy sku number. In
the above example the dummy sku number would be 890-00001.
Make sure the price is entered as the per-gram price if the
scrap gold category is set up as 'Price by Weight' instead of
piece. If the major class code is setup to calculate 'Price by
Piece', the retail price is the simply amount to be credited
the customer. Type the price as a positive number.
3. Make sure the quantity is entered as a negative number (ie.
-1). If a weight is prompted for, that too must be entered as
a negative number (ie. -10.4). By typing a negative quantity
and weight, you are adding that weight or quantity to
inventory. At this point the number quantity and weight for
this scrap gold dummy sku number has already been increased.
You may want to adjust the cost (wholesale value) of the trade-in.
To do that, while the trade-in line is highlighted - click the
Left-Arrow-More-Options Button and choose Cost. At the bottom
of the screen you can enter the cost value. You could type a value
that is lower-than, the same, or higher than the retail credit
Finally, make sure a N for non-taxable appears to the right of
the 'Extension' column. This is because you are not giving tax
credit for the trade-in.
4. Check the Total Sale figure located under the department and
sub-total. This is the net of the sale total and includes both
the item being purchased and the trade-in. If the number is
positive, the customer owes you money and can be tendered in
the regular payment screen. If its zero, no money is owed by
either party and the sale is complete. If the number is
negative, the store owes the customer money and the negative
number is the refund amount. In this instance, you will have
the option of issuing a credit slip, company check, paying
with cash or crediting the customer's in-house charge account.
5. Later when you disperse the materials you can manually adjust the
quantity and/or cost of the trade-in sku.
How to Accept a Resaleable Item as a Trade-in
1. To accept a resaleable item trade-in, start by following Step
1 of the "How to Record a Scrap Gold Trade-in" section above.
2. On the second sku number line, in the first part of the sku
number entry field, type the major class code of the
In the second part of the sku number type '99999' (five
nines). The question, "That item was not found. Do you want
to add it now?" will appear. Answer Yes.
Next you will be prompted for the Location or Case Code. Once
the location is entered, the Jewelry Shopkeeper will create a
new sku number for the item. This sku number will be the next
sequential counting number for that major class code. The
number '99999' is not actually used as part of the assigned
sku number so you can type the '99999' number every time.
Next type the vendor code and style number. You may want to
designate a special manufacturer code or minor class code for
trade-ins for reporting purposed. See the discussion of "How
Trade-ins affect Sales and Sales Tax Reports" below to see
why. Type an item description that is to appear on the sales
slip as well as an inventory tag.
In the 'Cost' entry field type the value that you will credit
the customer. If the major class code is a 'Cost by Weight'
category, this cost is the cost per gram or carat you plan to
credit the customer.
The 'Retail' entry field is the retail price you plan to sell
the item for after the trade-in is complete.
Type both the Quantity in Stock and Weight in Stock as zero.
Entering zero here is very important! (because before the
trade-in you had zero of this item.)
After these entries you will be returned to the sales screen.
The new sku number and description will automatically be
filled in on the sales screen. In the 'Price' entry field,
change the price to be credited for the trade-in. In the
'Quantity' and 'Weight' entry fields, be sure to type in
If commissions are paid, be sure to press <Ctrl-Page Down> to
remove the sales clerks commission percentage. Otherwise the
clerk's commission report will reflect a return against their
sales instead of a trade-in.
Finally, make sure a N for non-taxable appears to the right of
the 'Extension' column because you are not giving tax credit
for the trade-in.
3. Follow steps 3 and 4 from the "How to Record a Scrap Gold
Trade-in" section above.
How Trade-ins Affect Sales and Sales Tax Reports:
Trade-ins will show as negative sales (or returns) on all sales
reports. If you need to see sales reports without trade-ins
reducing the report total, using the Itemized Sales Reports screen
[6-2-3] type a specific minor class code range or manufacturer
range excluding the trade-ins. For example if you entered all
trade-ins with a minor class code of 999, you could type the minor
class code range as 1 through 998. Or if a manufacturer code of
'ZZZ' is always assigned to trade-ins, then the manufacturer code
range as ' ' through 'ZZY' will exclude the ZZZ's.
Since you always make trade-ins non-taxable, they won't affect your
sales tax report. E.g. if you sell a $500 ring and accept a $50
trade-in, the sales tax report will only reflect the $500 taxable
ring and won't deduct the $50 trade-in.