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userbeveragesunlimit
Level 2

Samples given away

We gave away $100 in samples and having issues when coming to the P&L.  Based on the recommendation in a couple online videos. I did the following:

1. Created a vendor called Samples

2. Created a new Chart of Account called Samples Expense

3. Created a $0 invoice for products given away to reduce inventory

4. Created a $0 Bill: $100 to Samples Expense and -$100 (negative) to Cost of Goods Sold.  $0 total.

5. The P&L correctly reflects the $100 to Samples Expense, but Cost of Goods Sold reflects -$100 when it should be $0.  In both online videos the negative amount towards Cost of Goods Sold entered on the Bill reflected $0 on the P&L.  What am I missing here? 

Solved
Best answer February 04, 2021

Best Answers
Rasa-LilaM
QuickBooks Team

Samples given away

Hi there, userbeveragesunlimit.


When recording promotional items, you’ll have to add a sample customer instead of a vendor. Then, create a zero invoice to show there’s COGS without income. This is because creating a bill will only show that you received the products for free.


Here’s how:

 

  1. Go to the Sales menu on the left panel to select Customers.
  2. Tap the New customer drop-down to open the Customer information screen.
  3. Fill in the fields with the correct information.
  4. Click Save to keep the profile.

 

To create an invoice:

 

  1. Press the New menu in the upper left and pick Invoice under Customers.
  2. Click the Customer drop-down to select customer sample.
  3. Fill in the remaining boxes.
  4. Then, key in the item given away in the Product/Service field.
  5. Input the number of items in the QTY field and the rate should be zero.
  6. Press Save and close.

zero income.png
For future reference, this link outlines the complete steps on how to how to adjust your inventory and move the Cost of Goods to a Promotional Expense account: Write off inventory items given as promotional samples.


Feel free to post a comment below if you have any clarifications or other concerns. I’ll jump right back in to answer them for you. Have a great day ahead.

View solution in original post

Angelyn_T
QuickBooks Team

Samples given away

Thank you for getting back, @userbeveragesunlimit.

 

Yes, you need to create an expense account and an invoice for the samples. Then, record a journal entry to remove the income, credits the customer in Accounts Receivable, and credits Cost of Goods to record the Expense. I can guide you on how.

 

First, run the Profit and Loss report on the accrual basis to see the income and cost of goods amount you need to input on the entry.

 

  1. Click on Reports at the left pane, then open the Profit and Loss report.
  2. Enter the invoice date.
  3. For the Accounting method, select Accrual.
  4. Tap on Run report to refresh the page.
  5. Identify the amount of Income and Cost of Goods you need to adjust.

 

Once done, record a journal entry. For the line-by-line details, I recommend following the instructions provided under the Create a journal entry section.

 

If you need additional help with recording the journal entry, you can seek help from a professional accountant. This way, he/she can guide you with selecting the correct accounts and tracking your transactions accordingly.

 

Please let me know how else I can help you with recording promotional samples in QuickBooks Online, I'm always here to help. Have a good one!

View solution in original post

4 Comments 4
Rasa-LilaM
QuickBooks Team

Samples given away

Hi there, userbeveragesunlimit.


When recording promotional items, you’ll have to add a sample customer instead of a vendor. Then, create a zero invoice to show there’s COGS without income. This is because creating a bill will only show that you received the products for free.


Here’s how:

 

  1. Go to the Sales menu on the left panel to select Customers.
  2. Tap the New customer drop-down to open the Customer information screen.
  3. Fill in the fields with the correct information.
  4. Click Save to keep the profile.

 

To create an invoice:

 

  1. Press the New menu in the upper left and pick Invoice under Customers.
  2. Click the Customer drop-down to select customer sample.
  3. Fill in the remaining boxes.
  4. Then, key in the item given away in the Product/Service field.
  5. Input the number of items in the QTY field and the rate should be zero.
  6. Press Save and close.

zero income.png
For future reference, this link outlines the complete steps on how to how to adjust your inventory and move the Cost of Goods to a Promotional Expense account: Write off inventory items given as promotional samples.


Feel free to post a comment below if you have any clarifications or other concerns. I’ll jump right back in to answer them for you. Have a great day ahead.

View solution in original post

userbeveragesunlimit
Level 2

Samples given away

 
userbeveragesunlimit
Level 2

Samples given away

Thanks for the response but I don't know how creating a $0 invoice to a customer of Sample will reflect as an expense on the P&L.  Previously it was suggested that I create a new Chart of Account called "Samples Expense - COGS or "Advertising/Promotional - COGS".

Angelyn_T
QuickBooks Team

Samples given away

Thank you for getting back, @userbeveragesunlimit.

 

Yes, you need to create an expense account and an invoice for the samples. Then, record a journal entry to remove the income, credits the customer in Accounts Receivable, and credits Cost of Goods to record the Expense. I can guide you on how.

 

First, run the Profit and Loss report on the accrual basis to see the income and cost of goods amount you need to input on the entry.

 

  1. Click on Reports at the left pane, then open the Profit and Loss report.
  2. Enter the invoice date.
  3. For the Accounting method, select Accrual.
  4. Tap on Run report to refresh the page.
  5. Identify the amount of Income and Cost of Goods you need to adjust.

 

Once done, record a journal entry. For the line-by-line details, I recommend following the instructions provided under the Create a journal entry section.

 

If you need additional help with recording the journal entry, you can seek help from a professional accountant. This way, he/she can guide you with selecting the correct accounts and tracking your transactions accordingly.

 

Please let me know how else I can help you with recording promotional samples in QuickBooks Online, I'm always here to help. Have a good one!

View solution in original post

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