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• # 91643
• Mon 17 Jun 2013 03:54 PM

Could someone help me with how to account for this example:
A company makes bags so purchases are mainly fabics and hardware, then gives bags as gifts to friends and family throughout the year as gifts nothing to do with a gift from the business. how is this accounted for as they are finished items not just taking the parts from store to use for own use? I am stuck as I want to account for the cost in making them etc
Many thanks Clare

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• # 91718
• Thu 20 Jun 2013 02:01 PM

Hi,

I would do this is as drawings - debit drawings and then credit purchases or stock of finished goods account.  Either that or create a gifts account to be debited and shown as an expense in the final accounts?

Hope that goes someway to help.

Thanks
Lisa       

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