USA Vendor Part Sale???

[JHill55]

We have a vendor that assembles and integrates a final product for my company. We have excess inventory that the vendor could us, and we want to provide this material in exchange for a discount on the final product that provide back to us. I assume we can set this up as a vendor part sale and recognize revenue on the material? Would this material exchange be considered a prepaid on the balance sheet and relieved against AR when they bill us?

US based company....

Thanks

 

[kirby]

When you ship $100 in inventory to vendor as sale

DR Accounts Receivable $100
CR Sales of Inventory Parts <$100>

DR Cost of Parts Sold $100
CR Inventory Parts <$100>

After vendor bills you for $2,000 sale to you less $100 discount for the part sale

DR Final Product Inventory $2,000
CR Cash <$1,900>
CR Accounts Receivable <$100>