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Bookkeeping/Accounting question...?

If you are in the business of selling a product and frequently send out a "product demo" for a shop to try and they will either place an order later and be billed for it then (the order will be at dealers cost and the 1 demo item will be at a special Demo rate) OR they can later return it, how do I account for the demo item that is out of inventory until the shop has time to test/try out or " "demo" it ? currently it is being invoiced so that amount is on a/r. Shouldn't it be in an other asset account until the shop decides to return it or to place an order? what would a good form be to record a transaction such as this?

You could take the demo out of inventory and record it in a separate asset such as Demo Consignments. It is not a receivable until the order is placed. Technically you still own the item while it is in the hands of the client.

When the item is returned you can return it to inventory, or you may want to keep it in a separa asset account for used demo merchandise. You have to decide whether it is salable as new after it is returned. If the item is not returned and an order is placed, then you can take it out of the Demo consignment and record the sale and receivable.

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