How will a Manufacturing company record giving away $20,000 free sample to customer? I understand it is a promotional expense. So, journal can be:
Promotional expense DR 20,000
Purchase CR 20,000
The problem is that if the same materials were actually purchased at $15,000, does it create any gap of $ 5000? (20,000-15,000)? Is there any better way to record this?
Accounting journal for Sample giveaway to customer
Re: Accounting journal for Sample giveaway to customer
How do you know they are worth $20,000 if you purchased them for $15,000? Do you also sell them?
Re: Accounting journal for Sample giveaway to customer
The issue is solved actually. It does not matter what is the sales price is. The transaction would be recorded at cost price.
So, promotional expense dr 15,000
Inventory/purchase cr 15000
So, promotional expense dr 15,000
Inventory/purchase cr 15000
Re: Accounting journal for Sample giveaway to customer
That's right. If it's purchased as a promo material, then you should expense it at delivery date, at least under IFRS:
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