Gift Certificate Sale

And what would the journal entry be when my customer redeems the gift certificate 6 months from now?
If my customers do not redeem their certificates before my year end or not all, does that mean I don't pay taxes on this revenue?

At time of sale: debit Cash, credit Unearned Revenue (a liability account)

When redeemed: debit Unearned Revenue, credit Sales

2008-12-10 18:04:32 by dak08

Wellness WORx is having a sale on gift certificates for the holiday's. Purchase in packs of 3, 6 or 12 sessions and save.

plz i need this or do u know were i can buy

go to target
but u dont need on its free and if sum1 give it to sumbuddy might have used online already or its been used

2008-07-27 17:06:00 by Jessica C

Price: $500.00 $500.00

Box of 50 physical Amazon.com Gift Cards. Each card is attached to a folded greeting card and is packed in an individual 5x7 inch unsealed envelope.
Sold by: ACI Gift Cards, Inc.
Amazon.com Gift Cards never expire and carry no fees. Gift Cards ship for free.

It appears that the question period has expired. If you have received an answer that meets your needs, please choose a 'best answer.'
Regards.

2005-12-17 11:09:48 by Dan Diaz

Price: $99.99

iPad
Slim clamshell leather design
Integrated recessed collapsible back stand

I purchased a day spa business a month ago. The previous owner gave me $4500 credit towards gift certificate redeem, as she claimed there weren't that much out there. However, just one month after the close of escrow, there were already more than $3000 worth of gift certifcate redeemed came forward. My concern is, the business will be hurt if I don't honor past gift certificate; however I can not afford keep doing this, especially without knowing how much are really out there because the previous owner did not have any record to trace. I couldn't even tell the authenticity of those gift certificates as a lot of them don't have date of issue, or number, or even value. I am stuck here, please help.

I don't envy your position.

The previous owner should have given you an example of a valid gift certificate so you could at least try to authenticate those being redeemed. Since the establishment is under new owndership you could post a sign stating a new policy regarding GC redemption. It could read something like:

"As of February 1, 2006 (or any date of your choosing) we will no longer be able to accept gift certificates that were purchased prior to December 1, 2005 (or whatever date you took over.) We apologize for any invonvenience this may cause." You might also want to mention the new ownership of the establishment.

Hopefully since you took over you have revamped the way your GC look so you can distinguish the old from new. You might also want to take into consideration that people may have just received the GC for Christmas and that would explain the huge redemption rate in the last few weeks.

It's one of those 'darned if you do and darned if you don't' situations. Just make sure that if you decide to cut off the old GC, you visibly post it in your shop for all to see for at least one month.

2006-01-10 20:55:15 by lily_laus

This is the first time this has ever happened to me: I tried buying a gift certificate for $20 at a Virginia business -- they said they had to charge tax and make the gift certificate $20.50 --- I know it's only 50 cents, but if they do that to all customers, that's a bit of a scam, right?

I think it is a bit of a scam because they already tax the stuff that will be bought WITH the gift card.....but to say whether it is legal or just how taxes are....I don't know. Try looking into local laws and asking around different businesses that offer gift cards....ask WHY they charge taxes on them and you should get an answer from at least a couple places...and they should in theory be repeat answers.

2008-02-18 07:18:08 by martyz