I work for a non-profit agency, and someone has donated items for a fair - popcorn balls, etc. These will be basically consumed - so it's not cash, not assets, etc. But it does have a value and I'd like to record it.
There is an income account for Donations but I'm not sure how to report the items.
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Journal entry.
"Carla" wrote
A journal entry at least, to credit the donation revenues account at the donor's cost if you can get that, and debit some inventory asset account. Then after your fair is over, credit the inventory account for the merchandise sold and debit cost of sales or whatever account you call it.
Sounds like a lot of work to me. Popcorn balls last, what, not much more than one reporting period, so all this is flowing to one monthly statement for the most part. You can't give the donor a receipt stating any dollar amount, and the amount you put down on your books will be a guess most of the time, regardless of where you got the numbers from. In the end the only revenues you'll have showing is the sales of the popcorn balls, ie: whatever amount you collected from sales. The rest is keep busy work. And from my experiences, most charities don't understand accrual books, and love cash-in cash-out financials. They understand that.
An alternative would be to not record the items received into inventory and just record as Donation income the monies received for selling the goods donated especially those that are perishable.
Since no money is changing hands I would not bother putting them on the books. Keep track of these items using excel would be sufficient.
"Carla" wrote
Yeah, I understand that, but you can easily get into a lot of guessing of values which makes it look like you're doing good when you're not, or doing bad when you're not.
For reporting purposes, maybe track them off the books and put the amount in a footnote to the financials and report that amount in the notes in the 990. But I would be hesitant to book that type of transaction.
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What is the issue here?? From what I understand goods are donated and being given away. Use value provided by donor and enter on income statement then give items away at cost again on income statement. Two new accounts which will net out at end. In the future anyone wants to know what those cute little things cost just look in the books. Do it as two entries. Receive; Income/Inventory, Disperse; Direct Cost/Inventory Do it as one entry. Income/Direct cost
Not a contra as it settles itself. Not an I did you did transaction.
No need to back them out. Donor wants a receipt??? Write one if appropriate. Entries still stay the same, except then perhaps two step better.
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