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For this transaction there will be 3 entries in the books as under:
Advertisement a/c Dr.
To Goods Distributed as free samples a/c
Goods Distributed as free samples a/c Dr.
To Trading a/c
Profit and Loss a/c Dr.
To Advertisement a/c
Goods Distributed as free samples a/c will be created under group Sales
Advertisement a/c will be created under group Indirect expenses.
Both above account will be closed and their balance will be transferred to Trading/P&L a/c
It's sale's Promotion Expense and also our product or stock is decreasing.
Journal Entry Will be:
Advertisement / Sales Promotion Expenses a/c Dr.
To Product / Goods a/c ( Amount will be in Cost Price, not in selling price )
Advertisement and promotion expenses
This can be passed as Sample Orders in Order Management
Accounting will be
Sales & Customer account will not be affected as it is free of cost
Debit COGS account
Credit will be to Inventory account
Can be automated to reverse from COGS to Advertisement & Promotions expenses account or it can be manually entered
Dr Promotional Expense (AED xxx)
Cr Inventory/ Stock (AED xxx)
Note: AEDxxx is Cost Price
Advertisement or Sales Promotion Expenses Dr.
Company or Distributors Cr.
It is Advertisement expenses.
This should be categorized as promotion cost & treated as expense current years portion & deferred the future years portion.
The simplest and straight forward set of entries is:
DR Advertising expense
CR Inventory
It type of the expense in general administration, and in the cost of general administration there is any the name of account marketing and promotion. so we'll expense to that account. for journal example :
Dr Cr
Exp.General administration xxxxxxx
COGS xxxxxx
all free samples are to be accounted as business development expenses.
