Do you sell gift certificates? You should be tracking your gift certificate liability; that is, how much in gift certificate sales your customers are entitled to redeem in the future.
If Ms. Smith buys a $100 gift certificate from you then comes back a month later and makes a purchase, how will you record these transactions in QuickBooks?
Before Ms. Smith even shows up on your doorstep, you will need to create a new Other Liability Account called “Gift Certificates Sold” or similar. Then, set up two new items on your Item List: one for sales of gift certificates and one for customer redemption of a gift certificate. Both of these new items will point to the same new account: “Gift Certificates Sold”.
Now, here comes Ms. Smith with her $100 ready to buy your gift certificate. Enter her gift certificate purchase in the Create Sales Receipts window using the new Item you created for sales of gift certificates. You have now increased the “Gift Certificates Sold” liability account by $100.
Next month, Ms. Smith buys $100 worth of product/service from you. In the Create Invoices window, you will have two lines on the invoice. The first line lists the Item that corresponds to the product/service she is purchasing today for $100. The second line on this invoice is the other new Item you created for customer redemption of a gift certificate in the amount of -$100. Save & Close, and this invoice completes the accounting for this gift certificate: you decreased the “Gift Certificates Sold” liability account and booked the income on your product/service.
If you set expiration dates on the gift certificates you sell, periodically you or your accountant will make a journal entry to move the amount of expired certificates from the “Gift Certificates Sold” liability account to an Income account.
