Hi good people. I have a unique situation and need help. I want to keep track on donated goods in inventory for a business running a school. Parents bring groceries for their children and I would like to keep track of these when when they are being used by the school. how do I capture them as inventory?
Enter the parent as a supplier with a unit cost of zero
Or if you want to maintain commercial item values, enter the normal item unit cost with a negative balancing entry to school donations
Wont it affect cost of goods sold, because there are some items which the school buys to supplement the donations. Is the school donations account an expense account because the If I capture the donations as purchases this means the contra entry would be to School donations (expense account)??
Do not overthink this. Follow @Patch advise. To simplify your case just create additional inventory items. For example:
- Carrots: the school buys from Suppliers carrots and you record at cost as per usual from for example Commercial Supplier 1.
- Donated Carrots: Donated item by parents and you record these at 0-cost with “Parents Donations as Supplier”.
Carrots purchase is an expense account
Parent donation is an income account
If you want to maintain commercial carrot prices carrot donations are entered as two line items
- carrot purchase
- Parent donation/ balancing entry
If you are interested in the schools average carrot cost (including donations) then enter carrot donations as a single line item with zero cost.