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OpsNir
Level 1

Noncash donations of products

We are a producer of COVID tests and would like to donate some tests to 501 c3 organizations.  How would we record this in QB De

6 Comments 6
MJoy_D
Moderator

Noncash donations of products

I can help you in recording these donations, @OpsNir.

 

First, you must create an invoice in QuickBooks Desktop for the COVID tests items that you've created. Once done, create an account to use to record charitable contributions from your Chart of Accounts. The next step is to create a product item for donations. From here, issue a credit memo for the value of your donation.

 

To create an invoice:

  1. Go to the Customers menu and choose Create Invoices.
  2. From the Customer: Job drop-down, select a customer or customer job. If the customer or job is not on the list yet, you can select Add New.
  3. Add all the necessary information.
  4. Select Save & Close.

To create an account to use to record donations:

  1. Go to Lists menu and select Chart of Accounts.
  2. Click the Account drop-down arrow at the bottom of the window and click New.
  3. Set Expenses as the Account Type and click on Continue.
  4. Enter a Name for the account.
  5. Click Save & Close.

You can also consult an accountant to get advised what account to use when creating this account. 

 

To create a product/service item for the donation:

  1. Go to List at the top menu bar and select Item List.
  2. Click the arrow beside Item and choose New.
  3. Under Type, select Inventory Part.
  4. Use the account you've created from the drop-down list in the Income account field.
  5. Add the needed details.
  6. Click OK.

To issue a credit memo for the value of the products you're donating:

  1. Select Customers and then click on Create Credit Memos/Refunds.
  2. Enter the info for the credit memo or refund. 
  3. Click on Save & Close once you're done.

Check these articles for more information: 

Let me know if you need further guidance in recording your donations. I'm always here to assist. Have a great rest of the day!

Diablo1
Level 1

Noncash donations of products

My business also donates some of our products. Our products are in the Items List as non-inventory parts as we don't track inventory in Quickbooks. Your guidance was to select Inventory Part as Type in the Item List. Does having our products as non-inventory items make any difference?

SashaMC
Moderator

Noncash donations of products

Hey Diablo1,

 

Thanks for reaching back out. I just wanted to let you know that it wouldn't make any difference. If you have any more questions, feel free to reply below. We got you! Take care for now. Bye. 

Rainflurry
Level 12

Noncash donations of products

@Diablo1 

 

The advice that @SashaMC and @MJoy_D gave is incorrect.

 

There is nothing additional to record when you donate a non-inventory item.  Your expense is the cost you have incurred for those products at the time you donate them, which should already have been recorded.  You can reclassify those expenses as charitable contribution expenses but there is no additional expense created when you make the donation.

 

Diablo1
Level 1

Noncash donations of products

 
Diablo1
Level 1

Noncash donations of products

I followed your instructions provided.

Have a charitable contributions expense account.

Added the donated item to the Item List. Instructions said to select the account I created from the drop-down list in the INCOME FIELD, so I selected the Charitable Contributions expense account, is this correct?

I created an invoice for the donated item. I checked the Charitable Contributions expense account and the amount shows up as a negative number. I then created a credit memo for the amount applying it to the invoice which zeros out the invoice amount due. I then checked the Charitable Contributions expense account again and the credit memo applies a positive amount thus zeroing out the contribution.

Why is the contribution being zeroed out? What did I do wrong?

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