Damaging out Testers/Broken Items

sfactor503

Hello,

I often have to damage out items / Testers or sometimes when testers of some candles run out I have to damage out the candles. This isn't a vendor return.

I was told a while ago to create a testers/damage credit account (for like $1M dollars) - and I ring the items up like this and use the credit. It allows me to at least account for the loss?

This is a decent work around but just wondering how other folx might do this?

AzT

We don't use that method as it adds an extra step for deducting that loss when it comes to taxes.

Our method:

1. Create an account and call it something like "Store Use" with NO CREDIT (this step is optional and you will see why later)
2. When you need to damage something out that cannot be returned have someone with the proper permissions to override the price create a new sale
   1. If you choose to use step 1, attach the customer to the sale
3. Ring up all applicable items
4. Override the price of all items to $0
5. In the notes section of EVERY item add:
   1. "Shrinkage" on the first line
   2. Explanation (store use, damaged, etc) on the second
6. The total for the sale should be $0, finish the transaction

I believe this is a superior method to creating an account with a credit limit.

• Immediate reflection in cost of goods sold
• Easy reporting
  • In the reports tab just go to "Lines" and search "Shrinkage" in the notes section with your date range applied
• Decreased risk of employee theft
  • Anyone can ring up a sale and attach an account with credit, this method only allows people you trust enough to override price to adjust the inventory
• In the event of an audit, you will have more detailed information about the transactions to justify your position

The one major flaw, and it applies to the Lightspeed recommended method too, is in regards to sales reports. While your profits and cost of goods sold will be accurate with my method, it will still show up as a sale. For most people this probably is not a huge issue, but if there is a candle that is constantly tested and rarely bought you may be led to believe it is selling a lot better than it actually is.

Curious to hear other thoughts on my method...