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How do I handle charitable product donations?

 
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Best answer 09-09-2019

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Established Community Backer ***

If the product being donated is inventory you must use th...

If the product being donated is inventory

you must use the item average cost as the amount for the donation, and if it is inventory then the

easiest way is to use inventory adjust, set the adjusting account to your donation or promotion expense account and lower the qty.  The value of the adjustment is subject to use tax if your state requires it, most do.

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Established Community Backer ***

If the product being donated is inventory you must use th...

If the product being donated is inventory

you must use the item average cost as the amount for the donation, and if it is inventory then the

easiest way is to use inventory adjust, set the adjusting account to your donation or promotion expense account and lower the qty.  The value of the adjustment is subject to use tax if your state requires it, most do.

View solution in original post

Established Community Backer ***

"discount the invoice 100% against the charity expense ac...

"discount the invoice 100% against the charity expense account of your choice."

In the US, only a C Corporation will have a Charity Expense account at all.

For most entities, you want to show this is Promotion.

You don't have More Expense; you already have the expense for acquiring the product, or labor costs for providing those services. What you are doing is Forfeiting Profit, because this sale is Fully discounted. There is no write off for Lost Profit. That is not Charitable Contribution.


Super Explorer **

You can create a Charity customer, make them non taxable....

You can create a Charity customer, make them non taxable.

Sell the item to them ( you may want to sell to them at cost, I would discuss with the accountant), payment Charge on Account.


In QuickBooks, discount the invoice 100% against the charity expense account of your choice.

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OK, In POS,  I created a charge account - Haney House Acc...

OK, In POS,  I created a charge account - Haney House Account - non-taxable to put inventory items in, that the store uses.  Then on the financial side I discounted the invoice 100% against the expense account. Perfect - but the amount is also showing as income on the P&F, so how do I credit that?  And to what.
Established Community Backer ***

@haneylumber You seem to be describing Use, not Donation...

@haneylumber

You seem to be describing Use, not Donation.

You will see Gross Sales and 100% discount.  That nets to 0.

And you perhaps need to deal with Use Tax.
Super Explorer **

Although the P&L show an income, there is an offsetting e...

Although the P&L show an income, there is an offsetting expense, so the net should be zero.
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That is correct but those numbers are big so they get los...

That is correct but those numbers are big so they get lost.  I guess I'm concerned because income is different from POS to QB and the amount is that store use items, so I guess I won't worry about it and continue on. Thank you for answering.  I know there was another way to deal with Store Use Items - by creating an Quantity adjustment Memo field Store Use and then set our expense code to that field, but I can't find where you set up that "Reason" field and where to change the account code from POS Inventory adjustment to our expense code.
Established Community Backer ***

What does this mean: "That is correct but those numbers a...

What does this mean: "That is correct but those numbers are big so they get lost."

They Offset each other, but they are part of your details. Nothing is lost.

"I guess I'm concerned because income is different from POS to QB"

Did you enter this as a 100% discounted Sale?

"and the amount is that store use items, so I guess I won't worry about it and continue on."

To remove something from inventory, you sell it, you Return it to the vendor, or you Adjust it off, which is the same as taking a physical inventory.

"by creating an Quantity adjustment Memo field Store Use and then set our expense code to that field"

Exactly. You use the tools that meet your needs.
Not applicable

Re: "discount the invoice 100% against the charity expense ac...

i am a C corp business. how do i get the charitable donation cost to show on my profit/loss statement? 

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