Dumps (spoilage) and donations are common in the food industry. FreshByte Software can be setup to assist in this process.
Process for managing Dumps (spoilage) and Donations.
Dumps (spoilage) and donations are common in the food industry. FreshByte Software can be setup to assist in this process. Using a Dump and Donation customer allows the creation of Sales Orders to capture items dumped or donated. When the Sales Orders are shipped and billed, the costs will be moved from Inventory to the Default COGS account. The Sales Analysis report is utilized to summarize the costs associated with dumped or donated product for the selected time period. A Journal Entry will be created to move the costs from the default COGS account to the dumped/spoilage and/or donated COGS account.
- Create two customers:
Dump (spoilage)
Donations
- Ensure that System Settings is set to allow billing with zero calculated price.
Options -> System Settings -> Sales Order (1) tab
Check ‘Allow to bill order with zero calculated price.’
- Create a Sales Order to record the items dumped or donated.
Use the Dump customer for damage/spoilage.
Use the Donation customer for donations.
- Add lines with the Item Codes that have been dumped or donated. Be sure to remove any price associated with the item.
- Verify that the invoice total is $0.00. Ship and Bill the invoice.
- At the time the invoice is Shipped and Billed, entries will be created in the General Ledger to the default COGS and Inventory accounts.
- Run the Sales Analysis Report. FreshByte recommends running the report Monthly.
- Sales -> Reports (P – Z) -> Sales Analysis.
- Select the Dump and/or Donation customer(s).
- Select Report Type -> Summary.
- Select Grouping By -> Customer Name
- Select the Dump and Donation customers.
Print or Preview the report.
Create a Journal Entry.
- General Ledger -> General Journal Entry
- From the Sales Analysis Summary Report.
- Enter the cost of the Donations as a debit to the Donations COGS account
- Enter the cost of the Dump as a debit to the Damage/Spoilage COGS account
- Enter the total COGS, from the report as a credit to the default COGS account
Check for accuracy. Once posted, the costs associated with the Donation and Damage/Spoilage are moved from the default COGS account to their respective accounts.