Inventory accounting for samples

Inventory accounting for samples

Posted in the Accounting Forum


Batavia, NY

#1 Mar 19, 2008
How do you account for inventory that is used for samples? The inventory item is divided into multiple portions and used as samples. There will be some left over that will also be discarded.
I am thinking about doing an inventory transfer to samples. I do want to know what we have in sample inventory though but I am not sure if the detailed accounting for each swatch of fabric is necessary. Does anyone have this issue?

Abbotsford, Canada

#2 Mar 20, 2008
You can treat the sample inventory as a cost of sale. That is, you can separate sample inventory from your current inventory by doing an easy journal entry:

Dr. Sample Inventory......x
Cr. Inventory..........x

When your sample inventory is depleted or discarded, then charge it to net income.

Dr. Cost of Sales.........x
Cr. Sample Inventory.........x

The reason for this methodology is because you are treating the sample inventory as a means to sell original inventory, so it's appropriate to charge it off to a cost of sales or cost of goods sold account when discarded.

North Bergen, NJ

#3 Jun 30, 2010
Sample inventory is sold to a sister company that share a Sample room, and that sister company has a transfer of ownership. The sister company sends out the sample at free of charge, and then wants to bill back the original company for its costs is this proper accounting?
ujala noor

Lahore, Pakistan

#4 Oct 13, 2011
mike this is totaly wrong treatment...we can not charge value of samples in CGS...because we are not recieving any revenue against is expensse actualy marketing expense..cost charge to those products which are to be sold...

San Gwann, Malta

#5 Aug 14, 2013
If the sample inventory are still on hand, then it will form part of the inventories as asset in the balance sheet?

Chagrin Falls, OH

#6 Dec 19, 2013
What are the steps required to write-off inventory that no longer has value?

Ex. Outdated Equipment that cannot be sold due to new and improve versions.

What can I do with this inventory?

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