Manufacturer provides items for free - kits for cleaning. Items captured in inventory at a Avg cost of zero since we paid $0. However sometimes we do purchase such kits if we run out of samples.
Kits sometimes are given to customers, sometimes we charge for the kits.
If Kits are zero cost and some at cost, the AVG cost is incorrect ($ paid / qty on hand), as a result when item is sold the entry capturing the cost will be incorrect.
Two questions:
1. Is it a good idea to capture items in inventory (since we want to keep track of the items) if we do not pay for the kits? Looking at the valuation report qty on hand and no value it does not look ok. It is confusing.
2. How should transactions be handled?
Thank you
