Good day, leelah_sxm-hotma.
I'm here to help you with how to handle this in QuickBooks Online.
You'll want to write off the inventory item used as a gift to a customer. Before doing the process, I suggest consulting an accountant on what account to use to ensure your books are accurate.
First, create an expense account, then an invoice for the item.
To create an expense account:
To create an invoice for the item:
Next, run a profit and loss report on the Accrual method to see the amount you need for creating a journal entry. Here are the steps:
Finally, create a journal entry to remove the income, credits the customer in A/R, and credit the Cost of Good Sold to record the Expense. You can refer to this article and go directly to creating a journal entry and applying the credit note: Write off inventory items.
That's it! Let me know how it goes. I want to make sure this is taken care of.
Okay. I did it exactly how I was told but for some reason, my net earnings ended up with a negative number, which is the total of my COG for the items in particular that i gifted.
the 3rd line auto calculated but I changed it to the “write off” as I was told.
Thanks for getting back, @leelah_sxm-hotma. Writing off using an expense account when purchasing an item gave you the negative total.
I'd recommend clicking the COGS amount to bring up the transaction and drill down the report. Then, change the item to an income account and update past transactions.
Generally, COGS is affected only when you sell the items. You can check out this article to learn more about inventory assets and COGS tracking in QBO.
To make sure your books are accurate, I'd also suggest to check with your accountant.
Come back to me if you need more help. I'm always around to guide you.