Kirsten, you rock! Thanks so much for replying so quickly. This was such a shot in the dark. Especially considering this thread is 2 years old.
When we discount the check with the loaded Gift Card, yes, the value remains on the card and it shows up in the Deferred Summary with the Deferred type, "Deferred (Gift Cards)", and a Net amount of $0 (example below). Doing it this way, the problem is the GC Liability is never recorded on our books. I believe you’re right that the only way to capture would be to make adjusting entries. I was just grappling with the idea of whether or not it should/ could be lumped in with the other "True" Gift Card liability.
So switching gears to how you are doing it with House Accounts--- Am I correct that the credit to the Liability is recorded when the sale is closed out to the House Account and then the adjusting entry would be to credit the receivable (aka House Account) and debit an expense? And that whether cash was received for the Gift Card or not it is all one ball of wax in the same Balance Sheet Account as a liability? Also, out of curiosity, where does this expense fall on your P&L? Is it below the EBITDA line? Or is it in Direct Operating Expenses?
Really appreciate you letting me pick your brain on this!
Alexis
Happy to help. And to make the statement...I am not an accountant, so you might want to consult your own accountant to see how they want you to account for things... 😁
In my world, if a gift card is created in the POS, it should be accounted for in accounting so your records balance, whether it's paid for or donated. So the way you're doing it, you might want to make those adjusting entries. I made a chart to show our flow.
We have our business promo type expenses fall into operating expenses, below prime costs. You'd want to consult your accountant to see where they want it.
I'm a hands on/visual person, so sometimes I need to make a chart...
