[smckeown]

I was wondering how you would account for a free gift card given out by a company. How do you record this transaction on the books ex: you give out a free $30 gift card if someone spends over $100.

[KongTheKonqueror]

I would probably include the $30 given away as a selling or misc. expense. I guess you gave away a gift card for $30, then they ended up buying over $100 in merchandise (which is the whole idea behind gift cards).

When the gift card was given away:
Dr. Expense $30
Cr. Gift Card Liability $30 (sense you are obligated to provide a product).

Then when they use the card (assume they bought $150 worth of goods):

Dr. Cash received from sale $120
Dr. Gift Card Liability $30
Cr. Sales Revenue $150

Of course if you sold a gift card, you would have debited cash instead of an expense. Your sales revenue will remain the same, but your total revenue will be reduced since you incurred an expense when you gave away the gift card.