# How to account (in QuickBooks) for giving free shirts to good customers



## HazeSFFS (Oct 18, 2015)

So, I'm a new screen printing business and I'm newly using QuickBooks AND I'm using QB to track my shirt inventory..... So, here is my question: In QB, how do I account for a free printed shirt that I send to a customer?

My beginner's Guess: Create an Other Charge Item 'or' Service Item and then charge to account Product Sample Expenses COGS 'or' Advertising and Promotion Expense... then use that item to cancel out the charge in an invoice?

Or What?

Thanks in advance


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## utero (Jun 9, 2007)

Just put on the invoice at zero cost


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## HazeSFFS (Oct 18, 2015)

utero said:


> Just put on the invoice at zero cost


First, thank you for the response..... That would take the shirt out of my inventory, however I would like to properly account for the financial loss/expense? so that I can account for it when it's time to do my taxes (or analyze my performance).


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## utero (Jun 9, 2007)

Your loss would be reflected in the purchase of the item wouldn't it ?- you can't really put a perceived loss in your accounts when you've given the item away for free, otherwise we'd all be giving away t shirts but say we made a loss of £10k on it


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## ejnrby (Oct 20, 2014)

HazeSFFS said:


> First, thank you for the response..... That would take the shirt out of my inventory, however I would like to properly account for the financial loss/expense? so that I can account for it when it's time to do my taxes (or analyze my performance).


Wouldn't the loss be part of your COGS?


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## HazeSFFS (Oct 18, 2015)

I understand your points utero and ejnrby...



For more on this scenario, I make a shirt and invoice a customer $0 for the shirt and that will show my loss (for the shirt) when the COGS is accounted for...... but I mail this free-shirt at my expense... how does that shipping cost get accounted for? .... I know Freight and Shipping is another COGS, but somehow I need to get the shipping cost associated with that invoice? 

Thanks for the replies


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## frommarz (Aug 8, 2007)

You can set up a discount item, then assign it as a subitem of sales. Give it a name that makes sense to you, such as "shirts donated" or "discounts given". 

Then, you can invoice your client (or whoever you have given the shirts to) using your retail shirt price. In the same invoice, add a line using your discount item and reduce the total of your invoice to zero.

This way, when you run a P&L, you can easily see the amount of discounts you have given throughout the year. You can even drill down within the P&L to get a listing of who the discounts were given to.

It will not mess up your accounting at year end, as you are increasing and decreasing sales by the same amount, netting to zero.

Let me know if you have any questions!


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## SavannahMarket (Aug 9, 2016)

I would set it up as a marketing expense. You can divide it by the actual cost of the shirt and the mailing cost, or combine the two, but either way it is technically a promotional / marketing expense -- not a sale.


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## Godma (Feb 23, 2016)

SavannahMarket said:


> I would set it up as a marketing expense. You can divide it by the actual cost of the shirt and the mailing cost, or combine the two, but either way it is technically a promotional / marketing expense -- not a sale.


This is what I would do too


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