How to Post Gift Certificates

[Lynne Lepage]

Hi folks,

I have a client that is in the Printing Industry. He printed 100 Gift
Certificates at $25.00 (donated). The client's invoice total was
$56.50 (he paid the $6.50 (taxes) by Point of Sales and now the
customer wants to redeem 2 X $25 Gift Certificate.

How do we process the Gift Certificates in Simply Accounting and/or
QuickBooks?

Lynne

 

[Paul Thomas, CPA]

I have a client that is in the Printing Industry. He printed 100 Gift
Certificates at $25.00 (donated). The client's invoice total was
$56.50 (he paid the $6.50 (taxes) by Point of Sales and now the
customer wants to redeem 2 X $25 Gift Certificate.

How do we process the Gift Certificates in Simply Accounting and/or
QuickBooks?

The printing of gift certificates does not give rise to any income or
expense (save for the printing cost).

When a gift certificate is sold, it's like a pre-payment on an account. It's
nothing more than a customer giving you $25 to hold till they come buy what
it is they want at some later date. The net entry would be to debit cash
and credit a liability called something like "gift certificates redeemable".
You should be able to set the account up as a liability, so when someone
buys the gift card, the sale gets recorded into the liability account.

The sale is rung up as any other sale is. The payment is in the form of a
gift card might be tricky. Instead of recording cash or charge, record it
as a gift card. Most modern registers can account for this in some manner.
All it does accounting wise is reduce the liability (you've already received
the cash).