I seem to be going round in circles with myself and wonder if I could get some help on double entry on the above subject.
I have a client that owns a resturant that is VAT registered. They sell gift vouchers with a 12 month expiry date on them. All of their sales are standard rated, no cold take out etc. And the only place of supply is at this particular resturant.
My understanding is that the sale of these gift vouchers would be classed as a single purchase voucher, therefore VAT payable at point of sale, not redemption. As the VAT chargeable on the ultimate supply can be identified or ‘fixed’ at the time the voucher is issued.
But then the revenue will be accounted for on redemption.
I am struggling on the double entry when the bill in the restuant is to be settled. If I can put down below what I have so far:
Point of sale (eg £40 gift voucher)
CR Sales 33.33
CR VAT 6.67
DR Bank 40.00
DR Sales 33.33
CR Deferred Income 33.33
But I need to show that there is a £40 gift card that will be used against a sale in the future so I need to:
CR Gift Card Holding Account (balance sheet) £40
DR ??? I just cannot think where to debit this £40.
Redemption of the gift card
DR Gift card holding account £40
CR Sales ledger control £40 - to reduce the amount due on their bill
CR Revenue £33.33
DR Deferred income 33.33
So I am just stuck as to what the mysterious £40 CR should be when recognising the gift card and then where I reverse it out on redemption. What isn't sitting right with me is that there is a CR to deferred income and a CR to gift card holding at point of sale, so I have a double liability right now so I need this DR to level things out - it is just what is it?
I may be missing something so very obvious, apologies if it is, but I would really appreciate if someone could take a glance over this.
Thanks so much.