Donating Inventory

I'll help you remove your donated inventory to your balance sheet in QuickBooks, @AniB.

I can see that this concern is tag under both QuickBooks Online (QBO) and QuickBooks Desktop (QBDT). Let me provide the steps on how we can perform this action in QBO.

To start with, we can create a sales receipt to track the inventory that you've donated. Then, create a journal entry to  associate the donations that you've made to your Charitable Donations Expense account. Here's how:
 

1. Click the + New icon and select Sales Receipt.
2. From the Deposit to drop-down arrow, choose your bank account. This will create a zero dollar transaction in your bank register that can be reconciled at any time.
3. In the Product/Service section, select the product you are donating.
4. Change the Rate of the selected product to zero, then click Save. Then, select X to close out the screen.
5. Click again the + New icon, then select Journal Entry.
6. In the Account section of the first line, choose the expense account used to track charitable contributions (for example, Charitable Donations Expense).
7. Enter the cost of the product in the Debits field.
8. On the next line, choose the Cost of Goods Sold (COGS) account for the item you donated. The cost of the product entered on the line above will populate the Credits field.
9. Select Save and close.

For QBDT, go to the Customer Center and select Enter Sales Receipts. You can also access the journal entry screen by going to the Company menu and selecting Make General Journal Entries.

However, for your second concern, it would be best to reach out to your accountant. This way, we can make sure if your company can take it as a full deduction.
 
In addition, you can run the Balance Sheet report in QBO to review your assets, liabilities and equity. Just go to Reports and search Balance Sheet. You can find this report in QBDT by going to Reports. Then, select Reports Center and search for Balance Sheet.

I'm always here to help if you have any other concerns or questions. Just tag my name in the comment section and I'll get back to you as soon as I can.

Clarifiying question - so for a partnership (where no charitable deductions are allowed directly to the partnership, but flow thru to the owners on their personal returns).  The entry to record the donation of inventory on the books of the partnership would be credit to inventory, debit to the owner draw accounts?  Noting as a charitable donation, so that it flows thru on the k1 and can be reflected on personal schedule A in the event that the partner is eligible to take itemized deductions?

Thanks,

Jane H.

Does it have to be a 501(c)3?  There are multiple types of charitable organizations in the 501(c) classification with the IRS and most can accept donations and are exempt from some federal taxes.  I would assume that from the Corporation perspective of the donor that the expense is no different despite the 501(c) type.  Correct?

https://en.wikipedia.org/wiki/501(c)_organization

Hi, I have a problem. I gave some of my product to family and not to a deductible entity. How would I account for that in my books for inventory?

---

@Brandon James wrote:

Hi, I have a problem. I gave some of my product to family and not to a deductible entity. How would I account for that in my books for inventory?

---

Enter it as an owners draw

RaymondO, I'm missing something.  Can you go through the steps for QBDT, please?  I don't see where the charity we're donating to will be noted anywhere based on the information provided.  Thank you.  TracyK

I've got you covered, Tracy.

I'll share the steps to record your donated inventory in QuickBooks Desktop with the charity name attached to it. The steps shared by RaymondO can be applied to your product. I've listed the steps below so you can account for the donated items.

1. From the Customers menu, select Enter Sales Receipts.
2. For the Customer: Job ▼ dropdown, add the name of the company/charity you're donating to. If the customer is not on the list yet, you can click Add New.
3. Fill in the relevant information such as the Date and Sale No.
4. Choose a payment method.
5. Change the rate of the products to 0.
6. In the detail area, select the item(s) you are donating.
7. Click Save & Close.

After processing the sales receipt, make a journal entry adjustment. For this, you no longer need to add the charity name, except if you want to put a note or memo on the entry. Follow these steps:

1. Go to the Company menu and select Make General Journal Entries.
2. On the first line, add the expense account for charitable contributions, then input the cost of the product in the Debits field.
3. Tab to the second line, then select the Cost of Goods Sold (COGS) account for the items donated. For this, enter the amount in the Credits field. Make sure your debits equal your credits when you’re done.
4. Select Save or Save & Close.

I'm adding these links for your references when creating the needed entries to record your donation:

• Create sales receipts
• Create a journal entry in QuickBooks Desktop for Windows or Mac
   

Feel free to mention me if you need further assistance with tracking donations in QuickBooks Desktop. I'll be more than happy to help you in any ways I can.