Where does the cost of products purchased as display items go for direct sales home party consultant? If I give a product as a hostess gift or prize, how do I report it?

[heyrosay]

This is my first year working as a Thirty-One Gifts direct sales home party consultant. I have purchased quite a few of their products to show at home parties and vendor events.  I don't know if I record them as Inventory or Promotional/Samples.  Also, what if I sell a product as "cash and carry" or give a product as a hostess gift or party prize?

Thank you for your assistance.

[MichaelL1 · Accepted solution]

Products purchased for resale go to inventory.

So if you buy products that are used for promotions these are expensed when purchased. 

I am not sure what " cash and carry" means.

Inventory and Cost of Goods Sold (COGS) is set up like this.

Beginning inventory   $100  Goods on hand 1/1/2016

Purchases    $2,000  items purchased for resale to customers

Ending inventory  $300  what was on hand on 12/31/2016.

COGS  $1,800 gets applied in TurboTax against the sales. 

So if you buy something for giveaways and promotions, it does not go under purchases but it is a direct expense item.