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Accounting Question

I know this is a question for a tax person but I always forget to ask him. I just gave two gift cards to my chamber for a giveaway valued at $110.00 How would I calculate this in accounting? Do I put $110.00 went out in March and then count it as money when they redeem them in May or June? Someone help!

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Permalink Reply by Kim Galliher on April 3, 2011 at 6:31am

Most small businesses are on a cash accrual system. This means that you only account for income when the money is in your hand. It sounds as though you gave (donated) the gift certificates to the Chamber in which case it would go under Donations and not income at all. If the Chamber is not a non-profit and doesn't supply you with a tax ID number it might be considered more Advertising but then it still wouldn't be income. I have only worked as a bookkeeper in the accounting field and am not a CPA but that is how I've been told to handle such situations in the past.

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Permalink Reply by Laura Allen on April 3, 2011 at 7:33am

Kim is right.

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Permalink Reply by Stephanie Keffer on April 3, 2011 at 1:46pm

Thanks for the advice. It is mainly for advertisement because my name will get circulated to over 20,000 homes and in front of all the 1200+ business owners and managers. I will go ahead and right it off as advertisement then. I knew someone would have an answer :0)

Kim Galliher said:

Most small businesses are on a cash accrual system. This means that you only account for income when the money is in your hand. It sounds as though you gave (donated) the gift certificates to the Chamber in which case it would go under Donations and not income at all. If the Chamber is not a non-profit and doesn't supply you with a tax ID number it might be considered more Advertising but then it still wouldn't be income. I have only worked as a bookkeeper in the accounting field and am not a CPA but that is how I've been told to handle such situations in the past.