It is clearing my liability account, however I am also reporting income for the meal that was "purchased" with a GC that I donated and did not receive income for. When I give away a $100 GC, it is entered as a Liability and as Advertising Expense. When the customer redeems that GC, it comes out of the liability account but now I am taking income which off-sets the advertising expense I previously took. I guess another way to ask this question is - how should "sold GC" be entered differently than donated/promo GC that I don't receive money for? Both types end up as income when they are redeemed.