tx-rustler
Jun 19, 2009, 04:31 AM
Direct business to business - no barter broker
If I trade inventory for advertising
1. The inventory item is sold (bartered) at market and the income is sent to a barter checking account.
1a. Inventory asset decreases by the average cost
1b. COGS increases by the average cost
1c. As a result on the P&L for that transaction, there is a profit (sales less cost)
2. I write a barter check for the difference between cost and sales and use the advertising expense account.
All seems OK, profit for the transaction is zero. But I have a balance in the barter checking account - an asset that shows up on the balance sheet.
If I write a check for advertising for the full amount in the barter checking account, aren't I expensing the cost of inventory items traded twice (the COGS entry and the part of the advertising entry that duplicates cost)?
Is there an EOY adjustment made to the barter checking account, if so how? How do I get rid of the balance in the barter checking account (which is on the balance sheet as an asset)?
Stumped in Texas
If I trade inventory for advertising
1. The inventory item is sold (bartered) at market and the income is sent to a barter checking account.
1a. Inventory asset decreases by the average cost
1b. COGS increases by the average cost
1c. As a result on the P&L for that transaction, there is a profit (sales less cost)
2. I write a barter check for the difference between cost and sales and use the advertising expense account.
All seems OK, profit for the transaction is zero. But I have a balance in the barter checking account - an asset that shows up on the balance sheet.
If I write a check for advertising for the full amount in the barter checking account, aren't I expensing the cost of inventory items traded twice (the COGS entry and the part of the advertising entry that duplicates cost)?
Is there an EOY adjustment made to the barter checking account, if so how? How do I get rid of the balance in the barter checking account (which is on the balance sheet as an asset)?
Stumped in Texas