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arkvalleyinfo
October 16, 2018
Solved

Hi. Can someone please give me clarification on how to record inventory given for promotional purposes?

  • October 16, 2018
  • 2 replies
  • 0 views

I need to track the customers that received the promotional inventory as well as the inventory itself. Would it be considered a Sales Discount? I am confused. It seems that it would be a promotional expense, but how can I record it as that and then account for the COGS? Thanks in advance.

Best answer by Rustler

Freebies with a sale, you should use two item lines

widget, qty 20, $$$
widget, qty 3,   $0.00

When you use a negative number for qty, that puts the item back in inventory and pulls the average cost out of COGS

But to track promotional items, given away over the counter so to speak, use inventory adjust, set the adjusting account to promotional expense, and lower the qty - then the cost of the items hit the promotional expense account as they should.

There is no alias function in QB inventory, so you can not make a giveaway item that will affect qty on hand, and you can not just assign a cost to any item with out that cost coming from some account.

2 replies

Rustler
RustlerAnswer
October 16, 2018

Freebies with a sale, you should use two item lines

widget, qty 20, $$$
widget, qty 3,   $0.00

When you use a negative number for qty, that puts the item back in inventory and pulls the average cost out of COGS

But to track promotional items, given away over the counter so to speak, use inventory adjust, set the adjusting account to promotional expense, and lower the qty - then the cost of the items hit the promotional expense account as they should.

There is no alias function in QB inventory, so you can not make a giveaway item that will affect qty on hand, and you can not just assign a cost to any item with out that cost coming from some account.

A
arkvalleyinfoAuthor
October 16, 2018
Thank you. I really appreciate your help.
E
eye311
October 16, 2018
For example, say we have a product "CCB - coffee cups blue". COGs is $2 and normal sale price is $3. Customer A buys 20 and we add 3 promotional to the order. So we ship 23. The Invoice has CCB Qty 23 - $3 = $69. We add a line Promotional DIscount Qty 3 at $3. Net amount due is 60. 23 CCB's hit COGS so COGS records $46.

Another approach would be to create a separate part code for the promotional items. CCB-Promo. You set that up with COGs $2 and sale price $0. In that case your invoice to the customer would have Qty 20 CCB @$3 and Qty 3 CCB-Promo at $0.

Both approaches will properly record to the income and balance sheet. It depends how much detail you want to retain about your promotional expense - total expense, or total expense plus unit quantity.
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arkvalleyinfoAuthor
October 16, 2018
Thank you.
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