Sale of Products taken for Demonstration
Consider the following scenario:
A company is selling some new products.
For the marketing purpose, they take some products as part of demo to some site.
At site, if a customer likes the product they are willing to buy the product at site itself, the remaining products are returned to the warehouse.
The warehouse manager wants to show that the goods went out for demonstration. The sales personnel wants to show actual sales.
The entire products taken out for demonstration cannot be shown as Sales and the products returned back as Sales Returns as the financials may be affected.
The stock shall be correct at the given point of time in the Warehouse.
How can this be managed?
One solution to this case would be as follows:
1. Create a new Warehouse for demonstration, say Demo Warehouse.
When products are transferred from Main Warehouse for demonstration, just make an Inventory transfer from “Main Warehouse” to “Demo Warehouse”.
The inventory from the Main Warehouse is reduced as the products are taken for demonstration.
No sales have been occurred so far.
Financial entry would be Stock account debit 1000
Stock account credit 1000
So the financials are not affected.
2. Now after sales take place at site, the goods are returned to the Main Warehouse by making an Inventory transfer from “Demo Warehouse” to “Main Warehouse”.
Now the inventory is correctly recorded and accounted.
The sales quantity is recorded by posting AR Invoice from the “Demo Warehouse”
Thus the financials are recorded correctly.
This idea was evolved during the following discussion:
Thanks to Meghanath Sunkara