[GNC] Recording non-cash donations

[Rich Shepard]

On Mon, 2 Aug 2021, Stan Brown wrote:

> If you're donating items that have no value on your books, I'm not sure I
> would call that a "donation" in accounting terms. You could keep a record
> by entering a transaction that would have only one split, with Account =
> your charity account and Debit and Credit both = 0.

Stan,

Non-cash donations are tax deductible; for example, milage and fuel while
delivering Meals on Wheels to shut-ins, books to the county library, and
items given to Goodwill. For those of us who are sole members of an LLC the
company's net profits roll over to our personal accounts so both business
and personal donations (cash and non-cash) are reported on my personal tax
reports.

For years I've sent my accountant the proof of non-cash donations separate
from the business and personal financial reports for tax preparation. I've
decided now to record these in my personal books so they show up in the
year's balance sheet and income statement.

> If the item does have significant value but for some reason you never
> entered them in your books, you would create one or more asset accounts
> for them. Then you'd make two transactions for each item:
> (1) Debit: asset account
>    Credit: Equity (I think this is a case for making a direct credit to
> the main equity account, essentially a correcting item, because the item
> is not new income but something that you've had all along but just not
> in your books.)
> (2) Debit: Expenses:Charity
>    Credit: asset account

I'll look closely at this. It makes sense and allows me to think about it
until I see something from my accountant.

Thanks for the idea,

Rich