Suggest Contra Account for Donated Materials?

Posted by Carla on October 14, 2009, 5:40 pm

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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.

Thanks

Carla
October is Domestic Violence Awareness Month!
YOU can make a difference! :)

Posted by Haskel LaPort on October 15, 2009, 6:49 am

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>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.

> Thanks

> Carla

> October is Domestic Violence Awareness Month!

> YOU can make a difference! :)

Journal entry.

Posted by paulthomascpa on October 15, 2009, 8:03 am

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>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.

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.

--
Paul Thomas, CPA
www.paulthomascpa.com

Posted by Laura on October 15, 2009, 12:41 pm

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>>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.

> 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.

Posted by Carla on October 16, 2009, 4:07 pm

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Let me clarify - we are not selling them. They will be given out to
kids at the Halloween Street Fair later this month. When the person
donated them, they signed a donation letter saying they donated the
items and how much they cost.

I guess I can just keep track of things like that in a separate
schedule and not reflect them in the books. It's not material in
amount, just thought it'd be nice to keep track of to show community
support.

> An alternative would be to not record the items received into inventory a=

> just record as Donation income the monies received for selling the goods

> donated especially those that are perishable.- Hide quoted text -

> - Show quoted text -