Inventory Accounting Challenge
Summary:
We have a scenario of Promotional Item. We bundle a couple of child items into a Promo Pack. The transactions and accounting is as follows.
Miscellaneous Issue of Child Item: Debit Promo Expense Account, Credit Inventory account. The material is issued at 75 (for example)
Miscellaneous receipt of Promo Item: Debit Inventory Credit Promo Expense Account. The item is received at 70 (for example)
In this case the Promo expense account is Debited 75 and Credited 70, The difference of 5 is the Promo Expense.
For the above business process (ignore our solution for the moment), customer wants the accounting entry to be:
Promo Expense Account Debit 5