Record employee gift certificates
I have a client who gave employees gift certificates at year end. How should they be recorded?Thanks
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7 Replies
12/28/06 9:41am PST
It depends on really what type of gift certificates they are and how aggressive your client wants you to be.
If they are gift certificates to another entity say Amazon.com I would just expense them out as an office/supply expense and be done with it, but if they are gift certificates to your client's place of business then I would credit the gift certificate liability and debit cost of goods sold.
Adam Dieterich
Quickbooks Certified Proadvisor
12/28/06 4:07pm PST
When a gift certificate that is to be redeemed at the seller's place of buisness is issued or sold, the transaction can be recorded either with the sales journal (treat the activity as a sale of the certificate) or with the general journal. In either case, the transaction will debit the cash account if a sale or in your case, the appropriate expense acount and credit a liabilty account titled Gift Cerificated not Redeemed or some such title.
When the certificate is redeemed for product, the transaction is the same as any other sale except that the funds come from the liability account instead of cash, cheque or credit card. The transaction will credit the appropriate sales accounts and tax accounts and debit the liability account.
12/28/06 5:20pm PST
i'm confused ... i'm reading this differently than others ... are you asking how they should be recorded as an 'expense' (ie. advertising, employee benefit, etc.) or when they're redeemed? ...
everyone who has responded seems to think 'redeemed'? ... clarify please ...
12/28/06 6:27pm PST
Sorry..I did not explain well. These are gift certificates given to employees as year end gifts.
Thanks,
Missy
12/28/06 10:48pm PST
you didn't answer the question ... do you want to know how they're recorded when given to the employee or when they're redeemed by the employee?
12/29/06 9:24am PST
I believe they were purchased by the employer, so they are an expense and when they get redeemed is unimportant. I would follow the answer in #2 unless these are for a major amount over $100 each or something. Then you may have issues w/ W2 reporting etc.
