Business Accounting Question

[Mark Phillips]

On Fri, Mar 11, 2011 at 9:12 PM, Eric Morey <eric at glodime.com> wrote:

> On Fri, 2011-03-11 at 12:06 -0700, Mark Phillips wrote:
> > when I sell a sweatshirt
> > with our club logo on it to a parent for $25, and the cost is $15,
>
> Are you selling the sweatshirt for $25 or $15? Is the parent required to
> pay the additional $10 above the wholesale cost?
>
> If the answers are $25 and yes. Then you have no donation to keep track
> of. You have a sale with a $15 Cost of Goods Sold.
>

I believe there is a donation component, which is the difference between the
cost (ie fair market value) of the goods or services received and the amount
the donor gave to the charity.  It is no different than a charity throwing a
dinner dance and asking for a donation of $100, and the fair market value of
the event is $40/person. The donor has then donated $60 to the charity.

Mark

>
> Assuming no receivables or payables:
>
> Debit Merchandise Assets (Inventory) $15
> Credit Cash $15
>
> Debit Cash $25
> Credit Merchandise Sales $25
>
> Debit Cost of Merchandise Sold $15
> Credit Merchandise Assets (Inventory) $15
>
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