Charity Donations

The way to account for jobs done for charity purposes is relatively simple. The idea is to keep Accounts Receivable from being affected.

The first thing to do is to create a customer that is used when charity jobs are performed. To do this, go to:

Accounts Receivable (Module 2)
- Customer Master (Task 17)
  - Enter New Customer Record (Sub-task 1)
    - Below are the important fields:
      - 02. Company name: CHARITY CUSTOMER
      - 11. Slsperson # :50 (House Account)
      - 13. Price type :000000000 (Selling prices will be zero.)
      - 20. St. tax flag:N Exempt
      - 24. Credit limit:0 C.O.D. (ensure this is set to COD)
      - 37. Freight Trm :1 No charge
      - 39. Bill Terms :2 C.O.D (ensure this is COD)
      - 42. Contract ? :N Yes / No / Chain

Giving Products as a Donation:

When a charity sale is made of products, i.e. paper, toner, poster board, etc…, bill the items out at a zero price. This affects only the Inventory and Cost of Good Sold (COS) accounts, crediting the Inventory and debiting the Cost of Goods Sold accounts. *Note: The COS account will need to be adjusted at the end of the month because it will be overstated, and in reality the COS amount for the charity transaction belongs in the contributions expense GL account or its equivalent.

Month end report for manual journal entry:

Month end report to obtain the amount for the manual journal entry, run an Order Processing report for the "charity" customer.

To do this, go to:

Order Processing (Module 6)
- Miscellaneous / other history (Task 16)
  - G-L / Tax / Auditing (Sub-task 1)
    - G/L sales account / date / item IHSACT
      - Print this report for the “Charity” customer #, for ALL G/L account #’s, for the month the adjustment will be made, ALL item #’s, Suppress detail records? NO.

Use the total cost on the report and make a General Ledger Manual Journal entry with a debit to the Contributions/expense account and a credit to the Cost of Goods Sold G/L account.

Giving a Print Job as a Donation:

When opening an order in order entry go to Field 6 Sale type: change this to 4 Sale/cost. Put the repro items on the invoice. (Normally this type of item doesn’t have a cost.) When typing in these items, type in the cost of the items. Take into affect the cost of the paper, toner, etc…. The selling price of these items should be zero. Post the zero invoice to A/R just like any other invoice.

Month end report for 2 manual journal entries:

Print the same report, G/L sales account / date / item IHSACT as above at month end. Use the total cost on the report and make a General Ledger Manual Journal entry with a debit to the Contributions/expense account and a credit to the Cost of Goods Sold account.

Second journal entry may be needed. When the A/R to G/L interface is printed, obtained & posted into G/L it will include a credit to inventory for the cost of this invoice. A journal entry may be needed to debit this inventory G/L account and credit the correct inventory G/L account. For example: The items sold on the print job donation invoice may have the G/L account #131-00-01 Inv Repro. So a debit to 131-00-01 Inv Repro & a credit to 139-00-01 Inv Merchandise for the cost of this invoice may be needed.