USA How to record free product sent to customer, not really a promo item.

[gingerbooks]

Hello, I have some products that I sold and the products were missing a component when shipped to the customers (vendor error). I ordered the missing pieces from the vendor and now I am shipping those to my customers for free (since it should have been included in their purchase to begin with).

The vendor invoice for the components was deducted out of my bank account and recorded to Inventory. I think the correct JE to make is to credit the items from inventory and just expense to a Promo/Samples account? They aren't going to be sold so I don't think I need to create a sales/COGS JE?

I am also assuming that I need to record the landed cost (item cost plus shipping) of the items in my promo/samples expense account, correct?

I am using QBO Essentials and do not have inventory setup in QB, I keep track of it in a spreadsheet since I just have a handful of items I sell.

Thank you in advance for your help.

 

[Victor Shah]

Hi,

technically, there is no wrong in treating these supplies as sample. But, just in case in future, if you want to compare, how much you had to distribute as actual samples and how much you had to reorder and replace as it should have been part of actual purchase like this. If you record these to samples, you may not get such numbers or reports from accounting software as a report and part of your P&L.

Instead, i would create a GL for replacement/warranty and book such replacements to these accounts so that at the period end, you have an idea how much you had to spent on replacement of any product.

I hope this helps!

 

[Jac]

you can add on samples expenses, set the adjusting account to sample expense. You could also create a sales receipt for a zero price, but that puts the cost in the cogs account.