An unredeemed gift card is a liability, not revenue — you owe a future service. Outstanding balance is total sold minus total redeemed; recognize revenue only as cards are used.
The example
$5,000 sold, $3,200 redeemed.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | 5000 − 3200 | — |
| 3 | Liability | → $1,800 |
The formula
The formula:
How it works
How it works:
- Sum cards sold and cards redeemed with SUMIF over the ledger.
- The outstanding balance = sold − redeemed — a liability you still owe.
- Recognize revenue only on redemption, not at sale — selling a card is deferred revenue.
- Track redemption rate = redeemed ÷ sold to understand breakage and cash timing.
Selling a gift card is borrowing, not earning. The cash arrives today but the service is owed later, so the unredeemed balance sits as a liability on the books and revenue is recognized only as cards are used. Treating card sales as immediate revenue overstates earnings and creates a nasty surprise when a stack of old cards gets redeemed. This is illustrative bookkeeping, not accounting advice.
Try it: interactive demo
Total sold and redeemed.
Variations
Total sold / redeemed
From the ledger:
Redemption rate
Redeemed ÷ sold:
Revenue recognized
Only redemptions:
Pitfalls & errors
Liability, not revenue. Unredeemed cards are owed, not earned.
Recognize on redemption. Revenue is the redeemed amount, not the sale.
Not accounting advice. Breakage and escheat rules vary — this is illustrative.
Practice workbook
Frequently asked questions
How do I track gift card liability in Excel?
When do I recognize gift card revenue?
What's the redemption rate?
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