Prize Vouchers
IGC
Member Posts: 5
We are a sports club looking to utilise Wave, and would appreciate assistance in how to setup and account for prize vouchers.
(1) The treasurer will write out a voucher for the prize winner, let’s say to the value of $100, which can be redeemed in a number of shops and companies. (2) Once the shop/company receives and accepts the voucher for the payment of their products/services, they then send an invoice to us asking for the sum of $100. Finally (3) we would then transfer $100 from our bank account to theirs.
It seems we need to have a liability account for (1) because we now owe an as yet to be determined shop or company $100. When we make a payment at (3) we withdraw from our bank account using an expense category.
Any assistance on how to set this up and operate in wave would be appreciated!
Comments
I have setup a Liability account ‘Compeition Vouchers’ and an Expense account ‘Prizes’.
When we send out the voucher, a journal entry is added debiting ‘Prizes’ $100 and crediting ‘Competition Vouchers’ $100.
I now correctly see $100 under ‘to be payed out’ in the balance sheet.
When the voucher is cashed in and we pay the shop, the checking account has an expense transaction of $100 against ‘Competition Vouchers’.
Now all is correct, liabilities = $0 and total expenses for prizes for the year shows as $100.
@IGC The solution that you came to seems to be the most appropriate way. If you are counting the Prize Voucher as an expense then you are definitely on the right track! If you are not looking to show this as a loss on your income, then you could also consider applying a partial payment from the liability account in the amount of the Voucher. The latter would be more applicable if you also issue Gift Certificates.