Processing Gift Certificates

When sold, a gift certificate becomes an outsider's claim on the assets of the business, and therefore, it needs to be recorded as a liability. Also, as the goods or services haven't yet been supplied to the customer, the sale of a gift certificate isn’t considered a sale upon which Sales Tax is payable. The Sales Tax is realized when a gift certificate is redeemed. To setup and record the sale and redemption of gift certificates, please follow the below steps.

Step 1 - Setup your accounts list

Create a new Liability Account (2-xxxx) called Unclaimed Gift Certificates. To do this, click on Accounts > Accounts List > Liabilities > New. Select the Detail, Credit Card Account option, then enter the Account Number and Account Name. Name the account Unclaimed Gift Certificates.

Step 2 - Recording the sale of a gift certificate

To enter the sale of a gift certificate:

  1. Click on Command Centers > Banking > Receive Money.
  2. Click on the Deposit to Account option, then click on the adjacent account field’s drop down arrow and select your check account.
  3. Enter the date and other transaction details then move down to the Acc# field.
  4. Click on the drop down arrow and select the Unclaimed Gift Certificate liability account.
  5. Place your cursor in the Amount field and enter the amount received.
  6. Make sure you do not tax the gift certificate.
  7. Check that the transaction details are correct then click on Record.

These steps will result in a credit posting to the Unclaimed Gift Certificates liability account and a debit posting (deposit) to your checking account.

Step 3 – Redeeming the gift certificates

The gift certificate can be redeemed via a sales invoice or through Receive Money.

Redeem Using Receive Money

  1. Click on Command Centers > Banking > Receive Money.
  2. Click on the Deposit to Account option then click on the adjacent account field's drop down arrow and select the Unclaimed Gift Certificate liability account.
  3. Enter the date and other transaction details, then move down to the Acc# field.
  4. Click on the drop down arrow and select the relevant income account (4-xxxx).
  5. Place your cursor in the Amount field and enter the value of the gift certificate.
  6. Check that the transaction details are correct then click on Record.

These steps will reduce the balance of the Unclaimed Gift Certificates liability account with a debit posting. It will also credit the relevant income account.

Redeem Using a Sales Invoice

  1. Click on Command Centers > Sales & Receivables > Enter Invoice.
  2. Select the relevant Customer Card then enter the other sale details.
  3. Click on Layout and select Service or Miscellaneous. Please note that Miscellaneous type invoices can’t be printed.
  4. Place your cursor in the Acc# field and select the relevant income account (4-xxxx).
  5. Place your cursor in the Tax Code field and enter the relevant SALES TAX tax code.
  6. Check that the transaction details are correct then click on Record.

These steps will result in a credit posting to the relevant income account and also record the SALES TAX liability.

To Close the Invoice and Record the Redemption of the Gift Certificate

  1. Click on Command Centers > Sales & Receivables > Receive Payments.
  2. Click on the Deposit to Account option, click on the adjacent account field's drop down arrow then select the Unclaimed Gift Certificate liability account.
  3. Enter the other transaction details and then apply the payment to the relevant sales invoice.
  4. Check that the transaction details are correct then click on Record.

These steps will reduce the balance of the Unclaimed Gift Certificates liability account with a debit posting.

How do I determine the value of the unclaimed gift certificates?

The balance of the Unclaimed Gift Certificates liability account will represent the value of the unclaimed gift certificates. The Find Transactions window is the quickest way of finding this balance.

  1. Click on Accounts > Find Transactions (located at the bottom of the window).
  2. Click on the Search By drop down list and select By Account. Click on the drop down arrow of the adjacent field and select the Unclaimed Gift Certificates liability account.
  3. Enter the From and To dates. The To date is the date at which you want to know the value of the un-presented gift certificates.

The Balance Sheet report could also be used as an alternative to the Find Transactions feature.