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Write off inventory items given as promotional samples in QuickBooks Online

by Intuit Updated a day ago

Learn how to write off inventory items you used for promotional samples.

Promotional samples given to customers count as inventory items. We’ll show you how to adjust your inventory and move the Cost of Sales to a Promotional Expense account.

Note:
  • Inventory tracking is only available in QuickBooks Online Plus and Advanced. If the amount you're writing off will significantly affect your gross sales amount, consult your accountant before making this entry. When creating these transactions, ensure you have the same date for all of them.

Create an expense account to track

Here's how to create an expense account to track:

  1. Go to Settings Settings gear icon. and select Chart of accounts (Take me there).
  2. Select New.
  3. From the Account Type dropdown, select Expenses.
  4. From the Detail Type dropdown, select Advertising/Promotional.
  5. Enter a name in the Name field (for example, "Promotional/Samples - Not for Sale") or accept the suggested name.
  6. Select Save and Close.

Create an invoice for the item

Here's how to create an invoice for the item:

  1. Select + New.
  2. Select Invoice and complete the fields.
  3. Select Save and close.

Notes:

  • Creating an invoice will reduce the item count in your inventory.
  • Under Description and Message on invoice, explain the action (ex. to write off Promotional Sample Invoice #).

Run a Profit and Loss report

To see the income and cost of goods amount you need for your journal entry, run a Profit and Loss report on Accrual basis.

  1. Go to Reports (Take me there).
  2. Search for and open the Profit and Loss report.
  3. Select the start and end dates.
  4. For Accounting method, select Accrual.
  5. Select Run report.
  6. Identify the amount of Income and Cost of Goods you need to adjust.

Create a journal entry

This removes the income, credits the customer in Accounts Receivable (A/R), and credits the Cost of Sales to record the Expense.

  1. Select + New.
  2. Select Journal entry.
  3. Enter the date in the Journal date field.

On the first line:

  1. Under Account, select Sales of Product Income.
  2. Under Debits, enter the amount you are writing off.
  3. Under Description and Memo, type something like "To write off Promotional Sample Invoice # - [insert client name]".

On the second line:

  1. Under Account, select Cost of sales.
  2. Under Credits, enter the amount that the Cost of Goods are for this product.
  3. The Memo field should auto-populate.
  4. Under Name, select the customer name.

On the third line:

  1. Under Account, select Accounts Receivable (A/R).
  2. Under Credits, enter the same amount as the write-off.
  3. The Memo field should auto-populate.
  4. Under Name, select the customer name.

On the fourth line:

  1. Under Account, select Advertising/Promotional.
  2. The Debits amount should auto-populate.
  3. The Memo field should auto-populate.
  4. Under Name, select the customer name.
  5. Select Save or Save and close.

Apply the credit note

Here's how to apply the credit note:

  1. Select + New.
  2. Select Receive payment.
  3. Select the customer name.
  4. All open transactions should be listed. Check the box beside the one(s) you want, then select Save and new. If there are no transactions, select Cancel.

End result sample

The end result should look like this sample:

image

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