COMPULINK 3300 Overland Avenue, Suite 201 § Los Angeles, California 90034 § 310 × 204 × 5121
Handling Trade-ins with The Jewelry Shopkeeper
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 exchange.
There are two basic types of trade-in merchandise:
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.
Thirdly, you might have a combination of the two. 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 metal.
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.
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 prompted.
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 (ie. 1).
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.
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.
How to Accept a Resaleable Item as a Trade-in
2. On the second sku number line, in the first part of the sku number entry field, type the major class code of the resaleable item.
In the second part of the sku number type '99999' (five nine’s). 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 negative amounts.
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.