How do I record gift cards received as a perk from vendors

grusso22 · ‎February 01, 2024

Hello-

I receive perks from Home Depot and Lowes for spending at these vendors. These perks are usually given to me as free gift cards to use at the vendor. How do I record these when I get them and then how do I record them when I use them?

I'm using Quickbooks Desktop Premier 2018 Contractor Edition

Thanks!

Rainflurry · ‎February 02, 2024

@grusso22

You're correct. The advice given by @LollyNino_C is for gift cards sold. With all due respect to QB employees, they are not trained in accounting.

For gift cards received, there are a number of ways this can be handled. Do you enter Bills from HD and Lowe's and pay them, or do you use an Expense/Check transaction in QB?

If you use bills, you can record a vendor credit for each gift card received and assign an income or expense account (depending on how you want to see it on your P&L) to the credit. Then, apply the gift card credit to the bills to reduce the balance due. If you're a cash basis taxpayer, this method works best because it delays the recognition of the gift card as income until it is applied to a bill.

If you use a Check or Expense transaction, create Other Current Asset accounts called 'HD Gift Cards' and 'Lowe's Gift Cards'. Then, when you receive the gift card from HD, for example, create a journal entry that debits the 'HD Gift Cards' other current asset account and credits either an income or expense account (depending on how you want to see it on your P&L). That records the GCs as an asset on your balance sheet and a corresponding amount to the income or expense account. Then, when you enter the Expense or Check transaction, enter the 'HD Gift Cards' as a negative amount. That reduces the amount of 'HD Gift Cards' on your balance sheet.

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LollyNino_C · ‎February 01, 2024

Hi there, @grusso22! Welcome to the QuickBooks Desktop Community! We are thrilled to have you here. We appreciate you taking the time to post your concern in the Community. I'm glad to share with you the steps for recording gift cards in QuickBooks Desktop (QBDT).

Thank you for choosing QuickBooks Desktop as your partner in handling your business activities. We are committed to providing you with the necessary resources and guidance to help you achieve your goals.

To start, create a liability account for the gift card:

Go to the Lists tab and select Chart of Accounts.
From the Account drop-down, select New and choose Other Current Liability under the Account Type.
Enter the Account Name, for example, Gift Card.
Click Save & close when done.

Once done, create a service item and link to the account.

Navigate to the Lists tab and click Item List.
From the Item drop-down menu, select New.
Choose Service in the Type field and enter the name of the gift card item.
Under the income account, select the gift card liability account.
Hit Save & close.
Next, create a Non-Inventory type item named advertising expense and link it to the advertising expense account.
Click Save & close.

To create a gift card, you'll need to create a sales receipt for the customer. In the first line of the receipt, enter the gift certificate item and its amount. On the second line, enter the expense item with the same amount but in negative form.

If the customer wishes to use the gift certificate for their purchase., you can create an invoice with the gift certificate item. Here's how:

In the Customers menu, select Create Invoices.
Fill the fields with the customer's info like the Date Invoice #, Bill to/Sold to, and Terms.
List the sold item on the first line. Then, enter the gift card item on the second line with a negative amount.
Select Save & Close.

Following these steps, you can record your gift cards received as a perk from vendors in QuickBooks Desktop. If you have more questions about gift cards, post them here in the forum. I'll be sure to answer them for you. That's it for now. Have a good one!

grusso22 · ‎February 01, 2024

I am a little weak on accounting (really, a lot weak) so I may be grossly misunderstanding what you are telling me, but reading your description it sounds like you might be explaining how I would give or sell a gift card to one of my clients. However, I am receiving a gift card for "free" from one of my vendors. It seems like this should be an income account of some type since I am getting a benefit...maybe "Other Income" type account? In any case, I want to account for having the gift card asset/income in my accounting software and then track when I use that asset/income when I use the gift card to purchase equipment or materials for one of my jobs. Thanks for your feedback!

grusso22 · ‎February 01, 2024

I am a little weak on accounting (really, a lot weak) so I may be grossly misunderstanding what you are telling me, but reading your description it sounds like you might be explaining how I would give or sell a gift card to one of my clients. However, I am receiving a gift card for "free" from one of my vendors. It seems like this should be an income account of some type since I am getting a benefit...maybe "Other Income" type account? In any case, I want to account for having the asset/income in my accounting software and then track when I use that asset/income when I use the gift card to purchase equipment or materials for one of my jobs. Thanks for your feedback!

Rainflurry · ‎February 02, 2024

@grusso22

You're correct. The advice given by @LollyNino_C is for gift cards sold. With all due respect to QB employees, they are not trained in accounting.

For gift cards received, there are a number of ways this can be handled. Do you enter Bills from HD and Lowe's and pay them, or do you use an Expense/Check transaction in QB?

If you use bills, you can record a vendor credit for each gift card received and assign an income or expense account (depending on how you want to see it on your P&L) to the credit. Then, apply the gift card credit to the bills to reduce the balance due. If you're a cash basis taxpayer, this method works best because it delays the recognition of the gift card as income until it is applied to a bill.

If you use a Check or Expense transaction, create Other Current Asset accounts called 'HD Gift Cards' and 'Lowe's Gift Cards'. Then, when you receive the gift card from HD, for example, create a journal entry that debits the 'HD Gift Cards' other current asset account and credits either an income or expense account (depending on how you want to see it on your P&L). That records the GCs as an asset on your balance sheet and a corresponding amount to the income or expense account. Then, when you enter the Expense or Check transaction, enter the 'HD Gift Cards' as a negative amount. That reduces the amount of 'HD Gift Cards' on your balance sheet.

grusso22 · ‎February 02, 2024

Thank you Rainflurry. This makes sense to me!

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How do I record gift cards received as a perk from vendors