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-   -   We provide 3 months free security monitoring to clients, what is the journal entry? (https://www.askmehelpdesk.com/showthread.php?t=693000)

  • Aug 12, 2012, 05:06 AM
    Pantnik
    We provide 3 months free security monitoring to clients, what is the journal entry?
    Some clients are offered 3 months free security monitoring when they first come to us. While we don't receive any revenue from them during this period, I want to know how I record this transaction. If I enter the following:
    Dr Discount - free monitoring
    Cr Revenue
    It has a nil net effect on the P&L. I need to show that while revenue is nil, our expenses for the period are in fact increased, in that we are providing a service at our expense. So my question is, how do I reflect this in the accounts?
  • Aug 12, 2012, 05:30 AM
    paraclete
    You need to get some perspective here

    Your expenses are what they are, if they have increased you report this by way of a report. If you want to artificially inflate sales to show a discount do so, but this is artificial and I suspect the result of you disagreeing with a policy.

    Accounting reports rely on facts, not some artificail perspective of what might have been. If you want to give perspective you might also demonstrate whether sales have risen or not because of this policy and the net increase/decrease in net profit

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