Double entry for Loyalty Card free product

imeldabye

Does anyone know how to acccount for: mobile coffee van offers Caffe Nero style cards - once a card has 9 stamps the 10th coffee is free of charge. How would you acccount for the free coffees?
thanks

MILLY21

Why would you wish to perform an entry for a free item?? Have i mis-understood you?

A-Vic

Unless accounting for the discount not sure ?????

lorraine

Who is the coffee for and what are the circumstances? this will decipher whether this is an allowable expense....

Also I wouldn't myself account for the free one - I think it would be unneccessary work!

Julia Crouch

You could ignore the free coffee and then the cost would just get included in with the cost of sales mix at the point of a stock take. But I would suggest that some one keeps some sort of record if only as a marketing tool.

Or you could write off the cost of each cup as a business expense.

But if the business is VAT registered then you should have a peek at this because that would mean that you would have to take the second option.

http://www.hmrc.gov.uk/vat/managing/charging/discounts-etc.htm

imeldabye

yes that is why i want to account for it- as it is a marketing expense, the 10th coffee is given FOC in return for the customer buying 10 coffees.

Raging Pineapples

I don't know about you, but I would do this:

Standard Coffee sale:
DR "BANK"
CR "SALES" (obviously )

Complimentary Coffee:
DR "Discounts -> 10th Cup Free"
CR "SALES"

That way you can pull off the balance of the "Discounts -> 10th Cup Free" for management accounting purposes, but it gets lumped in as a business expense and therefore cancels out your sale. You may want to rename that account to anything, but I'd prefer to use a sub-account if your accounting system supports them.