What should be Journal if you sale product free to employee?
- Thread starter Sha
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Counterofbeans
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How are the medicines recorded on the GL. As some form of asset?
Hi Sha! In my opinion, I think , first and foremost, the healthcare company probably bought those medicines first as an Inventory. If the company used inventory as the account for medicines. The transaction would be Debit Sales Allowance(=price per unit) Credit to Accounts Receivables.
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I would say:
1. Cr. Inventory (Decreasing it) and Dr. to COGS (Increasing it) - this moves inventory to sold
2. Cr. Revenue (Increasing it) and Dr. Employee Benefit/expenses (Increasing it)
Both at cost price (Basically you buy it from your own company at cost price and pay it with a virtual bank called "employee expenses").
If you would debit it to accounts receivables, it means the employee has to pay for it; but it's for free, right?
Though this would look like you lower the average margin you make on the medicines. To prevent that, you could:
1. Cr. Inventory (Decreasing it) and Dr. to Employee Benefit/expenses (Increasing it) - this moves inventory to an expense (Basically you scrap inventory)
1. Cr. Inventory (Decreasing it) and Dr. to COGS (Increasing it) - this moves inventory to sold
2. Cr. Revenue (Increasing it) and Dr. Employee Benefit/expenses (Increasing it)
Both at cost price (Basically you buy it from your own company at cost price and pay it with a virtual bank called "employee expenses").
If you would debit it to accounts receivables, it means the employee has to pay for it; but it's for free, right?
Though this would look like you lower the average margin you make on the medicines. To prevent that, you could:
1. Cr. Inventory (Decreasing it) and Dr. to Employee Benefit/expenses (Increasing it) - this moves inventory to an expense (Basically you scrap inventory)