Hi,
What is the best way to record free products given away as samples?
Ideally if possible, I’d like to be able to track total inventory given away, as well as have the inventory item reduce each time a sample is given away so that I can keep track of stock. I’m not even sure what account to put it against. Would it maybe be ‘Advertising and promotion’?
Forgive me if this is not a great question. I could not find anything in the forum using the search function.
Thanks,
Shannon
Yes, advertising and promotion would be a good choice and you would do the entry via a Journal.
and to double check would you do the following?
Or do you put recommended price instead of $0? or something else?
I’m just not sure I’m doing this right
Firstly you would Credit Inventory as you want to reduce it and Debit Advertising & promotion an expense.
You would also use the Item’s average cost x the number for the values.
Average cost for Stock 1 & 2 are 10 & 5
Thank you for the response. That’s perfect!
i just create a sales invoice with price as “0”. so in expenses inventory cost will increase and my sales value wont increase in Income
is this correct way to do?
Yes that works perfectly ok as well, it just depends where you want to show that expense - Inventory Cost or else where…
Hello Brucanna, can you please tell me were i create this table? it is on ‘sales invoices’?
Thanks in advance
Christoforos
You have three choices, but first you have to decide where you want to show the expense.
a) If you want to allocate the Free Sample expense to be part of P&L Inventory Cost - use a Sales Invoice.
List the items but don’t enter any Unit Values, just quantities.
b) If you want to allocate the Free Sample expense to a particular P&L account, say Marketing.
Activate the Inventory write off tab and enter the details but you can only do one item at a time.
c) If you want to write off a multiple number of items then use a Journal Entry as per Post #4 above.
Thanks a lot for your response! I will manage it as you recoment.
Hi Guys
I did every solution mentioned above to solve my free samples // adjusting my inventory
write off
invoice with 0 value
and JE
none of these soled my problem of ajusting the inventory / still the same, yes it did put value as in expense side but still the inventory did not go down
Thanks
Using a Sales invoice enter the quantity given away at a unit price of Zero. This will will put the cost of the inventory to the inventory cost account in the P&L. There is no need to do a journal. This is probably a good solution if the give aways are with other items sold on the same invoice.
If you wish to post the cost of the inventory to a Promotions account in the P&L then use Inventory write-off. (no invoice or journal required with this second method)
The caveat is that in inventory write-off you can not assign a monetary value (amount) only the quantity taken out of stock. If you are used to manually enter the cost and sales prices of inventory items then this method would not work as it will take away the number of stock items but not show a value in promotions. Simple journal entries taking stock away straight to promotions in G&L are easiest.
That is because the cost is assigned automatically at the current average cost of the inventory item in Inventory on hand. You do not need to make such a determination or assignment. The user chooses only the account to which that cost is posted.
No, they are not, because you have would have to separately look up the current average cost. The inventory write-off form is tailored with all necessary information:
@Abbas_Raad, please post a screen shot of the Edit screen for the inventory write-off you say you tried. Then, drill down in the Inventory Items tab on the Qty on hand figure for the item you wrote off. Post a screen shot of the result. You should see something like this:
Exactly! My point is that write-off is not dealing with “amount” but with quantity.
Thanks for replay
but I think after you write off for free samples your inventory should be ajusted accordingly… right?
after i did the write off or JE or invoice , inventory ending balance did not change as these adjustment should be deducted.
did not change the overall inventory
You missed my point entirely. Inventory write-offs deal with both. Apparently, you have not used them. The user enters the quantity. The program calculates the cost of the write-off automatically. And any other cost a user might decide to enter, if the cost could be freely determined, would compromise the average cost valuation method.
I have no idea what your screen shot shows. So I cannot comment on it. You need to post the screen shots I requested in post #15. And when you capture screen shots, you need to capture the entire Manager window so we know what we are looking at. Since you are complaining about quantity issues related to sales invoices, you also need to tell us whether you have enabled the Delivery Notes tab. If you have, and did not enter a delivery note for the sales invoice, the quantity will not be adjusted.
@Abbas_Raad, you really need to give up the sales invoice approach and use inventory write-offs.
