Charitable Contributions and Inventory Value

ohiobliss

I've done a search and can't find any questions or answers that come close to what I am looking for, so here goes.

I am a maker and I just set up formal business and accounting structures for my work this year. As of right now, I am only recording material costs as an expense and product sales as income. My sales volume and product variety doesn't warrant a detailed COGS for each item at this time, so I haven't really set up anything to account for that, or for either materials or finished product inventory.

Here's the problem: During the holiday season I typically contribute product for resale to benefit various charitable causes. I want to record that in my accounting but don't know where to start. I know I can create an expense account, title it 'Charitable Contributions', and use a journal entry to add the value of my donation to the account. But where do I pull that value from in order to balance the transaction? An asset or income account, correct? I don't want to use my regular product sales income account because I rely on that to calculate actual product sold. And I don't have an asset account set up for the retail value of my finished product inventory for the reasons stated above. So what to do?

JamieD

@ohiobliss Hey there! If you are setting up a Journal Transaction for the contribution, you will need to have the funds come from somewhere. If it's a personal contribution, you could always create a chart of account in Wave for your personal bank and vice versa. I guess realistically, you will need to think of where the money is actually coming from when you are contributing -- and that's how you would account for it in Wave.