Rustler’s Quickbooks Tips

And you thought the only income you needed to record came from sales huh? A donation is an income event too.

I don’t deal with non-profit accounting and from what I understand they have some different rules to go by so if you are a non-profit this may not apply.

A donation is an income, even if what is donated is equipment, it has to be recorded at the fair market value on the date of donation.

You need to create a seperate income account, called something like “Donation Income”, or just use the “Other Income” account and enter something in the memo block to remind you about it.

Then the value of the donation is debited to an asset account (cash, equipment, inventory, what ever) and credited to the “Donation or Other Income” account.

To get this done, bring up inventory adjust, mark it as a value adjustment, select the donation income account as the adjusting account, increase the quantity of the item, and increase the total value of the item. That gives the item a cost and the income account shows that same cost as income to the business.

This same holds true for rebates from credit cards, that is also an income.

A donation is free and clear of ownership, the person donating has no claim to business equity. If the donation is tied to a claim on ownership of some part of the business then you need to set up an equity account for the person donating (what they are really doing is investing not donating) and credit that equity account instead of income.