Donations of Goods Received
Hmmm ... How Do I Record A Donation of Inventory?
My client has a second hand goods shop. S/he is not a charity. S/he received donations of items to sell in the shop as well as purchasing goods.
I understand that donations go straight to revenue in the P&L. At year end if these haven't been sold do they have to stay as revenue or can it be deferred?
If I were recording the donations, I would enter them into inventory just like any other purchased good ... EXCEPT I would record the cost at zero dollars.
Doing this allows you to track the inventory as it sells and no year-end adjustments for inventory are necessary ... excluding of course events like theft, breakage, etc.
I'm not sure why you would want to enter a donation of inventory as revenue ... unless I've misunderstood your question. Revenue accounts are normally used to record sales to customers not receipt of inventory.
I'm assuming you are not talking about consignments which is different than donations.
Post back using the "comments" post if I've misunderstood your question.You can find the bookkeeping entries for inventory here
.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.
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