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How do I record a Gift Card (a gift from the company) where no payment was taken?

We issue GC to customers when there are customer service issues, giveaways, donations, etc. No payment is taken here, we are offering this GC as a free gift to a customer. 

 

We need to make an entry when the GC is issued:

DR: Marketing Expense

CR: GC Issued (Liability)

 

When the GC is redeemed:

DR: GC Redeemed (Liability)

CR: ?

 

And what entries need to be made for COG and Sales Tax?

 

Help!

 

Thanks!

2 Comments
QuickBooks Team

Re: How do I record a Gift Card (a gift from the company) where no payment was taken?

Hi there, @ds95.

 

You can record the Gift Card (GC) as sales receipt when issued and invoice when redeemed. I'd be glad to walk you through the process.

 

First off, you'll need to create a liability account named "GC Issued." Here's how:

 

  1. Go to Chart of Accounts, then click New.
  2. In the Account Type drop-down, select Other Current Liabilities.
  3. In the Detail Type, choose Trust Accounts - Liabilities.
  4. Enter GC Issued in the Name field.
  5. Click Save and Close.

Then, create a service item that should link to the liability account. Let me guide you how.

 

  1. Click the Gear icon, then select Products and Services.
  2. Select New and choose Service.
  3. Enter Gift Card in the Name field.
  4. In the Income account drop-down, select GC Issued.
  5. Click Save and close.

Once done, you can now create a sales receipt for the GC you're going to give to your customers.

 

  1. Click the Plus (+) icon, then select Sales Receipt.
  2. Select the customer's name.
  3. Choose Gift Card from the Product/Service drop-down.
  4. Enter the amount.
  5. In the Deposit to section, choose Marketing Expense.
  6. Click Save and close.

Then, create an invoice for the redeemed GC. Here's how:

 

  1. Click the Plus (+) icon, then select Invoice.
  2. Choose the customer's name.
  3. On the first line, select the Item being bought.
  4. Enter the amount.
  5. On the second line, select the Gift Card (the one linking to a liability account), and enter a negative amount.
  6. Click Save and close.

After those steps, you'll be able to record your GC based on your sample entries.

 

Here's an article you can read on for more details: Sell and Redeem Gift Cards or Certificates in QuickBooks Online.

 

In case you need tips and related articles in the future, visit our QuickBooks Community help website for reference: QBO Self-help

 

Don't hesitate to leave a comment below if you have any other questions. We're always here to help.

Established Community Backer ***

Re: How do I record a Gift Card (a gift from the company) where no payment was taken?

@ds95 

 

You know I understand how to do this, and reading the intuit reponse leaves me wondering what the hell they are explaining - not only that but part of it is just wrong.

Create a liability account called gift cards, and create a service item which has that same account selected as the income account named gift card

Create a non inventory type item called advertising expense and link it to the advertising expense account

 

to issue the gift card
create a sales receipt for the customer
line one, gift card item, qty one, amount
line two, advertising expense item, qty -1, same amount (that is a negative one)
save the zero dollar transaction

 

to redeem the gift card
list the items being sold
list the gift card item, qty -1, and the amount (that is a negative one)
the customer pays the balance due if any

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