Drawing Inventory for Personal Use and Vice-Versa

waver

I'm looking for some insight into the GAAP (Generally Accepted Accounting Principles) on how to draw inventory items from a sole proprietorship for personal use.

For example, I bought a T-shirts through my business as inventory for $10. I later realize that I just want to use it myself. Do I just CR Inventory and DR Owner's Investment/Capital?

Conversely, if I purchased the a T-shirt for myself and later realize that I want to invest it in the business as inventory instead, do I simply DR Inventory and CR Owner's Investment/Capital?

Thanks for your help people!

Mikeg

Yep, the amount would be determined by your method of accounting for inventory. Different methods for GAAP versus tax. GAAP has 3, - weighted average, FIFO and LIFO
Mike G, CPA

waver

Hi Mike,

Just to be clear, I've got a new scenario for you. If all the items my business sells are unique in both what they are and their respective costs, I would simply account for something using its cost price whenever I decide to draw it from my business for personal use. Is that correct, since FIFO, LIFO, nor weighted average would be appropriate?

To Draw Inventory for Personal Use:
DR Owner's Investment/Capital, CR Inventory - Unique Item X

To Invest Personal Items as Business Inventory
DR Inventory - Unique Item X, CR Owner's Investment/Capital

Would this still be the right way to record these transactions for both inventory and tax purposes?

I appreciate your help!

• Waver