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.

@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

While entering Sales Receipt - 

1- I have entered client's name

2- selected Gift Card from product / services

but, not able to find Marketing in Deposit To.

can someone help..please.

Thank you

Thanks for trying the steps provided above, Umme.

You can only select a Bank or Other Current Assets type of accounts in the Deposit to field. Hence, the Marketing expense account is not a choice. Make sure to select the correct account in the Deposit to field so you can see it on your register.

You can use this article on how you can record and redeem gift cards: Sell and redeem gift cards or certificates in QuickBooks Online.

Your accountant would be a great help about this topic, too. They know the best way to enter the transactions and ensuring that it suits your accounting preference.

Feel free to drop by if you have more questions. Have a great day!

Thanks Rustler.  Perfect and simple solution.  

Good morning,

I am just learning Quickbooks and the issues I am having is with the partner app Receipt Bank that made all the uploaded receipts from all items already paid for travel meals, lodging, flights etc as a bill and I don't know how to fix that. Also I have many items that were all ready paid for such as the items above used with gift card redemption , cash or credit account that were closed. How do I input this into QB? 

Hope you're doing great today, @hcharles03.

To help determine why the receipts for your items paid are showing as a bill, I recommend contacting Receipt Bank. They'll be able to identify the root cause of this matter, especially with the mapping of the transactions, and provide a fix.

On the other hand, when it comes to entering your transactions that was paid through a gift check, you may follow the instructions provided by 

Mark_R or Rustler above. Those are the different ways of tracking entries that were paid using a gift certificate. 

To learn more about the process of selling and redeeming gift cards in QuickBooks Online, feel free to check out this link: Learn how to sell and redeem gift cards or certificates in QuickBooks Online.

Please let me know if you have any other questions about this or with QuickBooks. I'll be right here for you. Take care!

So far so good, except for the redeeming part, so what happens when the customer redeems the CG by purchasing products from my website? How do I record this? 

Good day, @Momok.

It's my priority to help you with recording your transactions in QuickBooks Online when a customer redeems a gift certificate by purchasing your product.

Once a customer purchased a product from your website or physical store, this is considered a sale. That said, you'll need to create an invoice transaction to track this entry.

However, in order to fulfill that obligation and track the transaction in QuickBooks Online, you need to set up a liability account and special items to use on a gift certificate invoice. You can follow the steps shared by Mark_R above on how create them.

After that, you can now start generating your customer's invoice. 

Here's how:

1. Click on the +New button.
2. Select on Invoice.
3. On the first line, select the Product/Service being bought and fill out the quantity and amount.
4. On the second line, choose the Product/Service for Gift Certificates (the one linking to a liability account), and enter in a negative number for the amount of the gift certificate.

Your invoice should look like this: 

To give you more insights about this process, you can always scan through this link: Learn how to redeem gift cards or certificates in QuickBooks Online.

Know that you can always get back to me anytime if you have any other concerns, @Momok. I'd be happy to assist you. Take care!

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@Rustler wrote:

@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

---

Hi @Rustler, I know this is old but rather than making my own topic I thought I might ask you.  I was wondering if this is also how you'd record a gift card sale if the value is more than you sold it for(let's just say $25 gift card sold for $20)?  If so, would  you mind helping me understand this a little more?

What I'm wondering is, why the advertising expense, and more importantly what would this look like in terms of debits and credits on the ledger?  And is there anything different to do if the full amount of the gift card isn't redeemed?

Intuit responses are just copy and paste from a flow sheet - little to no effort involved in accuracy - IMO
I rarely look at responses to my answers because I think people who step all over a thread are .. #@(*%#@(*$ .. and that is all intuit does IMO

If you sell a card worth $25 for $20, basically you are saying that if you will a purchase now then you will get you a deal later. Getting that deal is customer acquisition which of course is advertising, hence the advertising expense. But advertising expense is just the $5 difference, NOT the whole amount, and the transaction is not a zero dollar transaction at all.

A service item for the gift card in the amount of $25 posts that amount (credit) to a liability account
An advertising item for $5 posts that amount (debit) to an expense account (it is a debit because the qty in set to negative one)

The math then looks like, $25 received, less $5 spent on advertising leaves $20 cash received.

When redeemed you use the gift card item with a negative one qty and the amount, that negative one posts as a debit to the liability account lower the balance owed, the items sold post to income.

Gift cards should be (IMO) sold with an expiration date. On that date the money paid is no longer a liability and becomes income.

Thank you Rustler!   I don't care for the intuit responses a whole lot either - they're too scripted and sometimes inaccurate or irrelevant like you said.

I think this clears it up pretty well for me.  I was kinda hung up on what the negatives meant but you confirmed what I assumed.

So what I'm gathering is that when enterin categories negative quantities result in debits(while positives are credits), at least for things like sales receipts and invoices.  And if my thinking is right, the opposite is true for things like creating an expense or paying a bill.

Hello @Rustler, I also am hoping to tap into your expertise regarding this topic. In my case however, I have synced sales invoices from my website into QBO, and the synchronization doesn't take into account gift certificates applied. Example: a sale came out to $115.57 including sales tax and shipping, and the customer applied a GC of $100, paying the remainder $15.57. So I applied the payment (which syncs to QB through Paypal), and this has left the $100 as a balance on an open invoice. 

It's unfortunate that the sync process misses the gift certificates, and I've been unable to add it manually to the order either. If I use a gift card "product" and add a line to the invoice, it automatically recalculates the sales tax, which obviously screws up the total. 

So- How do I apply a gift certificate/receive a payment and accurately account for sales tax?

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@southernbulb wrote:

Hello @Rustler, I also am hoping to tap into your expertise regarding this topic. In my case however, I have synced sales invoices from my website into QBO, and the synchronization doesn't take into account gift certificates applied. Example: a sale came out to $115.57 including sales tax and shipping, and the customer applied a GC of $100, paying the remainder $15.57. So I applied the payment (which syncs to QB through Paypal), and this has left the $100 as a balance on an open invoice. 

 

It's unfortunate that the sync process misses the gift certificates, and I've been unable to add it manually to the order either. If I use a gift card "product" and add a line to the invoice, it automatically recalculates the sales tax, which obviously screws up the total. 

 

So- How do I apply a gift certificate/receive a payment and accurately account for sales tax?

---

Assuming you have the gift certificate item created which is linked to the liability account for gift certificates

create a customer credit memo, use that gift certificate item and the amount, then apply the credit memo to the open invoice