discount cards

porsche · #1 Mar 22, 2007, 04:04 PM

so the question goes like this: customers who spend $100 will receive a $20 gift card that can be applied to their next purchase. gift card exp. in 3 months, gross profit is 50%. what i need help on is journal entries, how would i account for it, and if the card is redeemed or not redeemed.

CaptainForest · Mar 22, 2007, 07:44 PM

Record $80 in Revenue right now (100-20).

As for the remaining $20, there are many possible ways you can record it depending on the circumstances.

You can record the 20 as revenue now, wait until they are redeemed or expire, or record some now and record an estimate account…that is, a warranty liability.



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