Gift Voucher sales from separate program

[monsta76]

Morning all!

Would like to pick your brains on the best way to account for Gift Vouchers, as I don't deal with them much at all.

My client uses Kitomba and sells numberous of gift vouchers each month.  Instead of entering each gift voucher into MYOB, I would like to journal entry monthly the GV amounts purchased, the GV amounts redeemed and also GV amounts that have expired all as bulk dollar amounts.  We can pull reports of these amounts from Kitomba. 

I am having a dumb moment today and cant think straight 

Is this correct:

Sale of GV:

DR Income - Sales 

CR Liabiliaty - Unclaimed GV

Redemtion of GV:

DR Liability - Unclaimed GV

CR Income - Sales

Expired GV:

DR Liability  -  Unclaimed GV

CR Income - Sales (maybe a separate account made for easier tracking/viewing by client?)

My problem that I can't get my head around is, that the sale of the GV comes through in daily total EFT monies, so therefore has GST applied on it. But the GST should not apply to the GV sale only when redeemed.  I literally cannot think today as I had nearly zero sleep last night! Help!

Your thoughts/opinions would be greatly appreciated, thank you 

[Leneth_A]

Hi @monsta76

Thanks for your post. We are grateful that you found this forum useful.

In this matter, I highly recommend speaking with your accountant or financial advisor as they will give you the best way to record it. You may also check This Help Article Gift vouchers to take you through the details.

Please let me know if you need further help.

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

Cheers,
Leneth

[monsta76]

Unfortunately the accountant is not helping. My client has changed accountants and the way they were originally told by their old accountant to do the monthly journals, I feel is not correct.

I have access to the Kitomba Program now and have been able to look at things more in depth.  The reports I have been supplied previously for each month, the previous Accountant instructed me to do the following journal entry only each month to account for the sale/redemption of Gift Vouchers:

Step 1. Calculate the GST exclusive amount of the unclaimed certificate as of 31/07/2022 from the report (example attached).

Step 2. Calculate the difference between the current balance in the balance sheet and the amount from Step 1.

Step 3. Record the amount in the manual journal

If the value of the certificate reduces, the variance will be recorded as a Debit.

If the value of the certificate increases, the variance will be recorded as Credit.

First Problem - the amount provided on the reports do not have GST in them as the program does not charge GST on the sale of GV at the time, I have double checked this in the sales reports/transactions on Kitomba. But previous accountant instructed me to calculate the GST component and use GST exclusive amount in my journals. I think the full amount on the report should have been used. Therefore Balance Sheet total is not a correct figure for Gift Vouchers Unclaimed account.

Eg reports - July total I used was $261964.46, not 288160.91)

Second Problem - all sales for each day via EFT etc have GST applied in the Xero rule, the Sale amount would include GV Sales, which should not have GST applied until redeemed. I don't see how the journals I was instructed to do reflect the GST component, which should not have been charged until the GV are redeemed. Am I right in my thinking or am I going crazy?? 

I am concerned with previous BAS's and the GST side of things.

I am so confused and frustrated!

If you can help in anyway, I would so greatly appreciate it!!

[Genreve_S]

Hi @monsta76, 

Thanks for your response and explanation. 

As per @Leneth_A's suggestion. Recording these certain transactions are considered financial advice and we are unable to provide this. We would highly suggest you speak to a financial advisor or get a second opinion from another financial advisor if you don't agree with how they advise you to record these transactions. 

Please let us know if you have any other concerns that we could assist. 

Cheers, 

Genreve