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Re: Gift Certificates

--- Charley Tiggs <..hidden..> wrote:

> How should gift certificates be handled? As a
> service attached to a 
> liability account or some other way?
> Charley

Journal Entry at time of sale should be something like
  Debit   Cash                      100.00
  Credit  Some_Liability_Account   (100.00)

Journal Entry when redeemed should be:
  Debit   Some_liability_Account    100.00
  Credit  Sales                    (100.00)

Some_Liability_Account might be something like
"Unredeemed Gift Certificates" but in accordance with
GAAP (Generally Accepted Accounting Principles) this
is a liability and should be recorded as such.  Gift
certificates not used by their expiration date will be
booked to income like in the 2nd JE above.

Well, that's the accounting answer (I am a CPA.), I'm
not certain the best system answer.  I suppose that
Gift certificate parts could be defined with the
account numbers adjusted as above.  If individual
tracking is needed than maybe the serialization
feature could somehow be leveraged for this purpose or
use a manual system that is reconciled to the balance
in the "Unredeemed Gift Certificates" account.


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