How are gift certificates vouchers and gift cards recorded as sales volume? If I sell a gift certificate or gift card for $100.00, does that get recorded as a sale?When a customer comes into my store and uses their certificate to purchase an item is that recorded as a sale again?
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In my business, the accounting of Gift <Cards / Certificates> goes deeper than the POS.
In the accounting system, GC sales are recorded as both a sale and added to a liability account since this is money that is owed to customers. The end result is that although the money came into the company, it is balanced by the same amount in the liability account, so there is no net affect on the company's balance sheet.
Once a GC is used to pay for something, the money is removed from the liability account and the inventory goes down, so the profit is recorded only at that time.
In my jurisdiction, GC's are not allowed to expire, so in theory the liability for un-redeemed GC's remains forever. The reality is that 10-20% of the value is never redeemed, and so once the GC's are over 2 years old about 15% of the outstanding GC value is transferred to income and written off from the liability account. We have found that only about 10% of the value of GC's over 2 years old is ever redeemed, so we use that to determine how much to transfer to income.
That is why we do not participate in programs like branded pre-paid credit card types of gift cards. in that case the unspent money ends up going to the company that runs the program. When we run the GC program we get to keep the unredeemed balance - which is free money. Overall, GC's are a great deal for the businesses, and a terrible deal for consumers, but I'm Ok with that since I sit more on the business side of the ledger than the consumer side in this case.
As I understand; The sale of Gift Certificate is Non-Taxable and counts toward gross sales as does any item sold. Redeeming a GC is a tender transaction. The purchased item is recorded as a sale.
A detailed sales report can be modified to adjust the Sales Tax and Income Tax due
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