Accounting & Bookkeeping & Small Business Forum

[Guest]

If a gift card is given to the customer who make the minimum sale revenue, how can I record the journal entry? If the gift card is redeemed or expired, how can I record it?

[Guest]

If you're a student of Universal Accounting Center, you know that a sale doesn't occur until the goods are delivered. A gift card is regarded as a deposit against a future sale. To be totally accurate, then, you should show gift cards as a current liability (deferred revenue), and offset this account to Sales when the gift card is redeemed. However, in most small retail gift cards are such a small amount of their business, they usually create a sales account for gift cards, rather than have to reconcile the liability account all the time.

By the way, if you're not a student, you should be. This is a perfect example where additional training will save you time, and make you a more efficient bookkeeper.