How do I record inventory used to build promotional items for display purposes

You got me here to help you adjust your inventory used for promotional items in QuickBooks Online (QBO), @-scentpacking-co.

To start with, we can create an expense account for tracking.

Here's how:

1. On the upper right corner, look for the Gear icon.
2. Select Chart of Accounts.
3. Choose New.
4. Click Expenses for Account type.
5. For Detail type, choose Advertising/Promotional.
6. Enter the name of the Promotional Samples.
7. Hit Save and Close.

Once done, creating an invoice for the item would be the next step. Doing this will reduce the number of items in your inventory. I'd be glad to show you how:

1. On the upper left corner, click + New.
2. Choose Invoice and complete the fields.
3. Click Save and close.

Lastly, we can run a Profit and Loss report on Accrual basis to see the income and cost of goods amount you need for your journal entry. However, doing a journal entry credits the customer in the Accounts Receivable and it'll also credits Cost of Goods. 

You can also seek assistance from your accountant if you need further guidance about writing off inventory in your QuickBooks Online account. If you don't have one, you can use our Find-an-Accountant tool to look for an expert near you.

Furthermore, I'm adding an article you can always browse in case you need assistance setting up alerts for products that are running low or out of stock in QuickBooks Online: Set up low stock alerts in QuickBooks Online.

If you still have further queries about inventory items or anything else about QuickBooks, please feel free to let me know by dropping some comments below. I'm looking forward to delighting you again with further assistance. Stay safe.

Hi - thanks for this but I'm afraid it doesn't answer my question. I need to reduce the inventory and record the cost of those items as a promotional spend. You have described how to create the expense account, which I have done, but then you describe how to invoice a customer. There is no customer. It is using inventory items to create an advertising sample for display. How do I record that? Thanks! Gavin

Thanks for coming back here in the thread, @-scentpacking-co. Let me guide you further with recording inventory used to build promotional items for display purposes inside QuickBooks Online (QBO).

Beforehand, know that you're on the right track when recording inventory items used for promotional samples. After creating an expense account to track and making an invoice for the item, you can now run a Profit and Loss Report on an Accrual basis to view the Income and Cost of Goods amount you need for the Journal Entry. Then, create a Journal Entry to remove the income, credit the customer in Accounts Receivable, and credit the Cost of Goods to record the Expense. It is to right off the inventory items you used for promotional samples. To proceed with the process, follow the steps below:

Run a Proft and Loss report

1. In Reports, select Profit and Loss report.
2. Put the invoice date and choose Accrual for the Accounting method.
3. Hit Run report.
4. Determine the amount you need to modify in Income and Cost of Goods.

If done, create a Journal Entry

1. Go to +New.
2. Select Journal Entry and enter the date.

Here's a guide for the first until the fourth line:

First line

1. Choose Sales of Product Income under Account.
2. In Debits, put the amount you are writing off.
3. Under Description and Memo, type something you'll remember about this write-off.

Second line:

1. Under Account, select Cost of Goods Sold.
2. Have the amount of the Cost of Goods for this product in Credits.
3. The Memo field should auto-populate and under Name, choose the customer's name.

Third line:

1. Select Accounts Receivable under Account.
2. In Credits, enter the same amount as the write-off.
3. The Memo field should auto-populate.
4. Choose the customer for the Name.

Fourth line:

1. Under Account, select Promotional/Samples.
2. The debit amount should auto-populate.
3. The Memo field should auto-populate.
4. Under Name, select the customer's name.
5. Select Save.

After that, you can now Apply the credit memo.

1. In the + New, select Receive payment.
2. Choose the customer's name.
3. List all open transactions, check the desired ones, and select Save and New. If there are none, select Cancel.

Once finishing the process, here's what the result should look like:

Moreover, you can see this article for assistance if you want to be aware when products are running out of stock in your QuickBooks: Set up low stock alerts in QuickBooks Online.

You can count me in if you need additional help recording inventory used to build promotional items for display purposes or any QuickBooks-related concern. I'm always ready to assist. Have a great one.

Hi there - thanks for taking the time to reply. I'm afraid it still doesn't deal with my query. I cannot stress this enough, there is no customer. There isn't anyone to invoice. I use my own raw materials to build something that I would normally sell, but I don't sell it, I use it as a demonstration piece. It is never sold, there is never a customer to invoice. It stays as a permanent display piece. So permanent in fact, it's screwed to a wall.

I just need to expense the COS to the promotions account, and have the inventory adjust. Any ideas would be welcome. Thanks.

Hi there, @-scentpacking-co. 

I'll share some insights on how you can properly record inventory items for promotional purposes.

As my peer suggested, creating a Journal Entry will help reduce inventory and record the cost of promotional items.

It is recommended to consult with your accountant to choose the appropriate account instead of using accounts receivable for this purpose as there is no customer involved.

Here's an article that will guide you through setting up alerts for products that are low or out of stock in QuickBooks Online. Set up low stock alerts in QuickBooks Online.

If you have any further questions regarding inventory items or anything else in QuickBooks, please don't hesitate to let me know by leaving a comment below. I look forward to assisting you again soon. Stay safe!