posted September 1, 2016

Recording Auction and Raffle Items

by Kristen M. Conway, CPA, Audit Manager

Auction and raffles are common and successful ways for non-profit organizations to raise funds. To help makes these event successful, organizations often ask for donations to be used as auction and raffle items. The accounting treatment for these donations is dependent on whether the item is used for the auction or raffle. The organization should keep record of all items received and the type of fundraiser the donation was used for to ensure proper accounting treatment is used.

Auction Items

The organization receives a donation valued at $3,000. At the time the donation is received the following entry can be made:


DR.CR.
Asset$ 3,000....
Contribution revenue....
$ 3,000....

If the item is sold at auction for $5,000:

DR.CR.
Cash$ 5,000....
Asset
$ 3,000....
Contribution revenue....
$ 2,000

If the item is sold at auction for $2,000:

DR.CR.
Cash$ 2,000.....
Contribution revenue.....$ 1,000
Asset
$ 3,000....

....

Raffle Items

The organization receives a vacation package that is valued at $3,000. The vacation is raffled off. Raffle tickets are $50 per ticket. At the time the donation is received the following entry can be made:


DR.CR.
Asset$ 3,000
Contribution revenue....
$ 3,000....

...

150 tickets are sold for the raffle for a total contribution of $7,500:


DR.CR.
Cash$ 7,500
Cost of Direct Benefits.....$ 3,000.....
Asset
$ 3,000....
Raffle revenue
$ 7,500

50 tickets are sold for the raffle for a total contribution of $2,500:


DR.CR.
Cash$ 2,500
Cost of Direct Benefits.....$ 3,000.....
Asset
$ 3,000....
Raffle revenue
$ 2,500

The content of these pages is for general information purposes only and does not constitute advice. Heinfeld, Meech & Co., P.C. tries to provide content that is true and accurate as of the date of writing; however, we give no assurance or warranty regarding the accuracy, timeliness, or applicability of any of the contents.