Entry for a Free Sale

by Dilani

Q: What is the journal entry for selling goods for no value (i.e. giving it away for free)?


A:
Good question.

If the goods had value, let's say office furniture worth $300. And now you donate it to charity. Then you would:

Dr Donation (expense) $30
Cr Office furniture (asset) $30


If the goods had zero value, for example a machine that cost $1,000 and has been depreciated over 10 years to $0, and now you are giving it away for free, then you would simply cancel out the debit balance of the asset account ($1,000) by crediting it and cancel out the credit balance of the accumulated depreciation account ($1,000) by debiting it:

Dr Acc. Depr. (asset) $1,000
Cr Machine (asset) $1,000

Comments for Entry for a Free Sale

Click here to add your own comments

Entry for donation of depreciated asset
by: Hitesh

I could not understand the explanation given by you for the entry of donation of depreciated asset. Can you please explain in more simple words or by any other simple example.

Click here to add your own comments

Return to Ask a Question About This Lesson!.






Enjoying this Website?
Help Support it with a Donation

OR...





Advertise on Accounting-Basics-for-Students.com

Search this website:




All the lessons on this site and much, much more...

Accounting Basics: Complete Guide

Available Now On


Get Your Degree!

Find schools and get information on the program that’s right for you.

Powered by


Subscribe to
The Student Accountant newsletter

Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you The Student Accountant.