Recording donation made to a local charity in balance sheet

Whereas the contribution/donation is not paid out as a debt, it clearly does not go in the assets column. It reduces total equity and therefore land in the debits column, similar to known expenses, such as rent, electricity, telephones, etc. etc.

You never, ever record anything on the Balance Sheet. Period. Nor is it recorded on the Income Statement.

Record the transactions as a correcting entry in the Cash Disbursements Journal. Debt to Cash, credit to an expense account named Donations.

Wouldn't expense accounts be debits?

You are absolutely right. My error.

So, essentially it is a liability? I cant get my head around that idea so far. The template in use have assets,liabilities and equity and for sure, it is closer to liability. Or it should be like "charge the debit account?"

If you donated "items" - not actual cash, then you can't enter it anywhere.

If you must, evaluate its value, then write if off as an advertising expense.

Most companies can't declare charitable donations, anyway.

I believe they can, but only if it's a 501c3 Corp. This is for US companies and the cannot ever deduct political contributions.

If you bothered to read what was written by the poster, masimo, it is clearly stated that this was a cash donation of$23.00.

"my company donated items worth 23$ to a local cause/charity."

She didn't say they donated $23 cash or wrote a check.

This is all too funny for words.

I thought I'd post a youtube video on double entry but after several hours of exhaustive research I couldn't find a suitable video and , whilst not exactly none-the -wiser , can't post a link.

The best accounting treatment is to throw the note from the charity away and let the auditor discover the discrepancy during the next stocktake.

Alternatively, I found out that accounting involves posting to what they call a general ledger which affects something called the balance sheet.

The $23 gift of product reduces assets by $23 and the right hand side of the balance sheet called liabilities and owner's equity by $23 , who'd have thought.

Apparently expenditure is recorded on the left of the general ledger as a debit so I'd debit $23 to donations/ advertising. This is where the double entry comes in (surprisingly) and $23 is credited (yes I'm confused too) to purchases (but then you didn't ask about the taxation treatment of charitable donations, the GAAP or mention whether the mysterious donor received some quid pro quo.

I hope this helps you, it certainly helped me.

WARNING: No accountants were present during the posting of this advice.

Makes sense.

The company paid cash for the items, then gave the items to the charity.