Removing an item from inventory and labelling it a demo unit

One way to record inventory items used as demo units, donated, or provided as samples/promotions in QuickBooks Desktop is by issuing an invoice or sales receipt for these items, with the sales price set to $0, Morgan.

This approach accounts for the decrease in inventory, records the cost of goods sold (COGS) in reports, and avoids impacting revenue figures, while maintaining a clear record of your demo activity.

Here’s how you can reclassify your demo unit for an accrual basis:

1. Go to the Customers menu and Create Sales Receipt (or Invoices, depending on your workflow).
2. Set up a dummy customer account (e.g., Demo Units) for you to use to track internal/non-revenue transactions.
3. Add the relevant inventory items to the sales receipt or invoice.
4. Change the sales price of each item to $0.
5. Add a Description or use Class tracking to specify the items as part of your demo equipment for reference.

Alternatively, if you operate on a cash basis and are exploring other methods to record them, you can refer to this article for detailed steps and information: Cash Basis Correction/Classification.

This method provides an effective way to reclassify inventory for demo purposes while maintaining accurate bookkeeping. You can run the Valuation Detail Report to track and review the demo units.

It's best to consult your accountant for alternative approaches and to ensure proper guidance throughout the process.

Please leave us a response if you have other questions or concerns.

I run my books on a cash basis.  When looking at the instructions for those it shows to make them as samples or promotional items.  I am not going to sell the unit that I use as a demo unit.  What should I do with this?  These are not samples and are not being given to customers.