There are two ways to track inventory freebies, and each method produces a different set of postings. These methods are:
1) Using a Sales Transaction- If you use a sales transaction (either an invoice or a sales receipt), QuickBooks posts the transaction the same way it posts a normal, regular sale. Cost of Goods Sold is debited for the current cost of the item, and the Inventory Asset account is credited for that value. In addition, the Quantity on Hand is decremented from the item's record.
The amount posted to the income account linked to the item is Zero, and the amount posted to A/R (if you used an invoice) or Undeposited Funds (if you used a sales receipt) is zero. The zero posting is entered so you have a history of the transaction in your reports. Sales tax is unaffected because there's no tax on a zero-amount transaction.
When you create a Profit & Loss report, your net profit is reduced by the amount you posted to the COGS account.
2) Using an Inventory Adjustment Transaction- Use an inventory adjustment when you want to control the posting account that's receiving the debit (removing inventory decrements the Inventory Asset account, which is a credit).
In the Adjust Quantity/Value On Hand transaction window, use the following steps to track the sample:
1. Remove the item from inventory by entering the new quantity (current quantity minus one) in the New Qty column, or by entering -1 in the Qty Difference column.
2. In the Adjustment Account field, select the expense account you want to debit.
QuickBooks debits the expense account and credits the inventory account, and also reduces the Quantity on Hand for the item. When you create a Profit & Loss report, your net profit is reduced by the amount you posted to the expense account you selected. Even though no posting touched the COGS account, the bottom line is the same.