How to account for sponsored work

Myles45

Hi,

Can anyone tell me how I should account for work I do if I agree to sponsor the work & materials used?

Regards
Myles

kennyb3

Sponsor? Are you sure your not subcontracting or employing?

Myles45

Hi Kenny,

No, what I mean is that, if I offer to do a job & not charge the customer for it because they are allowing me to use the job for advertising my business, how do I account for it. They have not asked for invoice.

Obviously I am using materials I have paid for & my time which would normally be charged for.

Myles45

confused as to why no one is replying to this, I didn't think it was a complicated issue, maybe I need to explain better:

My customer asks if I will make sign for them at little or no cost to them, if they allow me to put my business name on sign. I agree to do it at no cost to them. How do I then account for this work?

ianuss

Okay, I'll have a go........ knowing that I'll most likely be wrong but also knowing that someone out there in the internet will just have to correct me.

Credit - Materials
Debit - Advertising (cost of materials)

Clanket

In reality, most people would just do the work and not record anything (providing they did not have a stock control function).

The technically correct way to account for it would be as follows:-

Debit advertising, credit sales (with any labour cost).

If you had a stock control function in your accounting package you will also need to debit advertising, credit materials stock (as per Ianuss).

ants09

Myles45 wrote: »

Hi Kenny,

No, what I mean is that, if I offer to do a job & not charge the customer for it because they are allowing me to use the job for advertising my business, how do I account for it. They have not asked for invoice.

Obviously I am using materials I have paid for & my time which would normally be charged for.

Hi Myles

for your own transactions the following would apply
cr sales dr drs
cr drs dr advertising

for the company your doing the work for

dr expenses p&l cr creditors
dr crs cr sales (for advertising)

Regards

Myles45

ants09 wrote: »

Hi Myles

for your own transactions the following would apply
cr sales dr drs
cr drs dr advertising

for the company your doing the work for

dr expenses p&l cr creditors
dr crs cr sales (for advertising)

Regards

Hi Ants,

Thanks for that, & apologies for my ignorance, but you may as well have written that in Hieroglyphics.

I don't understand your abbreviations I'm afraid. My accounting is very basic, as is my knowledge of it.

I do it all with Excel spread sheets my accountant originally set up for me as follows:

Cheques Journal
Lodgements
Purchase invoices

Customer invoices

Clankets reply would probably be the most obvious, but I kind of wanted to do it correctly so at least I know what should be done & although I don't have stock control, I thought, if I've had to pay for the materials, I aught to account for what's been used.

Regards

Clanket

If you wanted your spreadsheets to be technically correct then write up (in your purchase invoice spreadsheet) a negative invoice for the cost of the stock you used. The figure gets analysed as a negative materials. Then write up an invoice for the cost and analyse it to sponsorship/advertising. The credit and the invoice will cancel (in the total column) but you've moved the stock cost to advertising. You can write up the details of what you're doing on a piece of paper and file it with your invoices.

In relation to any labour cost you could do something similar in the lodgements. Write up a lodgement for the cost, and analyse it to sales. Then write a negative lodgement and analyse it to sponsorship/advertising.

Hope that helps.

Myles45

Thanks Clanket, That's more my language, much appreciated