Sales Promotions on Chart of Accounts

by Naz
(Kuwait)

Sales Promotions on Chart of Accounts

Sales Promotions on Chart of Accounts

Hello, Let me first of all thank you for help all over the world..

How to account for sales promotions expense and stock consumption..

Lets say we are supplier of Pepsi.. we have a promotion and we are distributing free Pepsi to 5000 people..

How to record it on the chart of accounts?

Thanks in advance for any help!

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Dec 28, 2017
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by: Stephanie

Thank you for your question about how to account for sales promotional expenses on the Chart of Accounts.

When pulling products out of an existing inventory to give away as promotional samples, there must be a journal entry to adjust the inventory account on the general ledger.

To do this you would use the actual cost of manufacturing the items, including storage costs and any other expenses used in the company's cost of goods sold calculation.

Then you would Debit sample expenses or prepaid expenses, depending on whether you are expensing or capitalizing your sample costs.

And you would Credit the inventory account for the same amount.

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