How do you journalize a donation of services and/or products? I own a hair salon.
submitted by me

sandy

If you give away free haircuts or products, just record the value of what you donated. Say a client gets a free haircut worth $40. You'd debit "Charitable Contributions" for $40 and credit Sales or Revenue for the same amount, or use a separate account for donations. It shows the value of your freebies without messing up your regular sales.

danielle

You need to record the fair market value of the donation as a contribution. For example, if you donated a haircut worth $50, you would debit a charitable contributions expense and credit donations revenue or a similar account. This way, your books reflect the value of what you gave away, which is important for tax deductions.

rod smith

Figure out the value of what you're donating. For example, the regular price of a haircut or the cost of products you're giving away. Create an invoice for your products or services, just like if you were making a normal sale. This records the value as income. Set up a "Charitable Contributions" expense account in your bookkeeping system (if you don't already have one). Issue a credit memo to "zero out" the invoice, using the charitable contributions account. This records your donation as an expense and cancels out the sale amount, so you aren't taxed on the donated value. That's really important.

If it's a product you've donated, debit the Donation (Charitable Contributions) account and credit the Purchases or Inventory account for the original cost of the items.

If it's a service, debit the Donation expense account and credit a Revenue account for the value of the services.