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Double entry for Loyalty Card free product

imeldabyeimeldabye Well-KnownRegistered Posts: 147
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

Comments

  • MILLY21MILLY21 Feels At Home Registered Posts: 59
    Why would you wish to perform an entry for a free item?? Have i mis-understood you?
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Unless accounting for the discount not sure ?????
  • lorrainelorraine Trusted Regular Registered Posts: 400
    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 CrouchJulia Crouch Feels At Home Registered Posts: 68
    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
  • imeldabyeimeldabye Well-Known Registered Posts: 147
    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 PineapplesRaging Pineapples Well-Known Registered Posts: 110
    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.
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