I track my inventory in an accounting software. We recently gave away a bunch of t-shirts and totes as promotional items. How do I update my inventory quantities and what is the journal entry for recording these items as promotional items and adjust the COGS? Thank you?
submitted by Cindy

Robert K Knaphis

To record the giveaway of promotional items such as t-shirts and totes, you should reduce your inventory quantities in the accounting software to reflect the items given away. The journal entry would be a debit to Promotional Expense (or a similar expense account) and a credit to Inventory for the cost of the items. For example:
Debit Promotional Expense
Credit Inventory
This adjustment ensures your inventory balance accurately reflects the remaining stock and records the expense associated with promotional items, thereby adjusting COGS appropriately.

JulesVernon

You need to decrease the inventory quantities in your system to account for the promotional items given away. The typical journal entry would be to debit a marketing or promotional expense account and credit inventory. This records the value of the items as an expense, which effectively reduces your COGS since these items are no longer part of inventory.

Chexton

When you give away items like t-shirts and totes, you should record that as a promotional expense. In your accounting software, decrease your inventory by the number of items given out. The journal entry would be:

Debit Promotional Expense (to recognize the cost of the giveaway)

Credit Inventory (to reduce stock)
This makes sure your inventory count is correct, and your expenses reflect the giveaway.

Chad Bills

Since you're giving away the items, just subtract those from your inventory in the software. For the journal entry, record it as a promotional expense (debit) and reduce inventory (credit). This way, you keep your inventory up to date and recognize the cost as a marketing expense, which impacts your profit.

Robles

Just update your inventory to show fewer t-shirts and totes because you gave some away. Make an entry where you record the cost as a promotional expense, and decrease your inventory. That way, your books stay accurate, and the giveaway is accounted for as a marketing expense, which affects your profit.