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Re: Gift Certificates
- Subject: Re: Gift Certificates
- From: Bruce Hohl <..hidden..>
- Date: Sun, 10 Dec 2006 17:19:51 -0800 (PST)
--- Charley Tiggs <..hidden..> wrote:
> How should gift certificates be handled? As a
> service attached to a
> liability account or some other way?
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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