I'm using Quickbooks Online, and have a question about properly accounting for a taxable in-kind transfer of inventory.
In consideration of signing a new agreement, a customer will be paid in kind 100 merchandise items from a vendor. The customer will not pay any cash consideration for the items, but will pay tax on the wholesale value of the items received (their wholesale cost). The customer will take the items into its inventory at wholesale cost, then sell the items at full retail, keeping 100% of the proceeds and paying tax on the profit above wholesale cost.
First, how do I properly record the non-cash taxable income received by the customer upon receipt of the 100 merchandise items? I've created an income sub-account for these items, but can't figure out how to show the receipt of the in-kind consideration into this account.
Second, I've created a product category for these items (they are all the same product), but how do I show the use of the in-kind income to "purchase" the opening inventory of 100 items?
After searching online, the only Quickbooks posts I found dealt with charitable contributions, and the steps described didn't seem applicable. Please let me know the correct steps to follow in this situation.
Thank you!
