Credit Card Liabilities & Credits across funds

[NeilZ]

I've got an interesting problem:

I created the liability account for credit card use as suggested by a few threads. Since this card is used across funds, I also use this account there.

We received a credit for something purchased in our operations account, and as recommended posted it properly to the liability account in operations, showing a negative balance

The next month, purchases were for operations, deacons and building. These were properly expensed and posted to the liability accounts in their respective funds.

However, the CC statement still shows a credit amount, no payment was needed, but the operations liability is now showing a positive balance, when it should be a negative one. Of course, the liability accounts in the other funds are also showing a balance.

I need to move the balances from the other liability accounts, to the operations area, but also need to show that the money is also moved from under one umbrella to the other so that operations checking is showing the correct amount.

The funds all use the same checking account, so its an accounting move only.

Any advice or request for additional infomation ??

[JohnDMeyers]

Was the credit from the credit card company a refund to a particular purchase, or some other amount that could not be tied to a single purchase or vendor?

What I am thinking is this.

If the credit was a refund amount, it could have applied to a particular expense line (a negative expense, like a refund) instead of the liability line.

If the credit was something other than that, it could be counted as an income instead of a negative liability.

Otherwise, that amount will linger in whichever liability account "forever" because the credit card company will probably issue a statement someday with that credit having magically disappeared.

Just some thoughts.

[NeilZ]

Was the credit from the credit card company a refund to a particular purchase, or some other amount that could not be tied to a single purchase or vendor?

What I am thinking is this.

If the credit was a refund amount, it could have applied to a particular expense line (a negative expense, like a refund) instead of the liability line.

If the credit was something other than that, it could be counted as an income instead of a negative liability.

Otherwise, that amount will linger in whichever liability account "forever" because the credit card company will probably issue a statement someday with that credit having magically disappeared.

Just some thoughts.

It was a credit for a specific purchase, and it was applied as a negative expense to the original expense line.

[Jeff]

However, the CC statement still shows a credit amount, no payment was needed, but the operations liability is now showing a positive balance, when it should be a negative one. Of course, the liability accounts in the other funds are also showing a balance.

I am not sure I understand this. If you look at the account activity for the operations credit card liability account how did it go from negative to positive?

[Jeff]

Just to follow up why I am asking this. It sounds like there are 2 issues here. First how to handle the cross fund liabilities when one fund has returned something. The second issue is the unexpected change in balance in the liability account in one fund.

[NeilZ]

Just to follow up why I am asking this. It sounds like there are 2 issues here. First how to handle the cross fund liabilities when one fund has returned something. The second issue is the unexpected change in balance in the liability account in one fund.

Bingo ...

[Jeff]

I am not sure if this is 100% correct, but this is how I would approach the problem when one fund has returned something and other funds have an amount on the credit card.

Let me setup the example first

Code: Select all

Fund 01 – Operations
Fund 02 – Deacons
Fund 03 – Building

Code: Select all

Accounts
01-1110-000 Operating Checking     5,000
02-1110-000 Deacon Checking        1,000
03-1110-000 Building Checking      1,500

01-2510-000 Operating Credit Card -1,000
02-2510-000 Deacon Credit Card       250
03-2510-000 Building Credit Card     300

The credit card purchases for the month were $550 (250 deacon, 300 building) Even though no cash was spent, we still need to adjust the deacon and building cash balances. Because effectively the operating fund has already paid this, so the operating fund is getting the cash back.

Code: Select all

Account       Debit      Credit
03-1110-000                 300 (reduces building cash)
03-2510-000     300             (reduces building credit card)
02-1110-000                 250 (reduces deacon cash)
02-1510-000     250             (reduces deacon credit card)
01-1110-000     550             (increases operating cash)
01-2510-000                 550 (increases operating liability already negative so should bring closer to 0)

I don’t know why the operating credit card would have gone positive, I would figure that out first before recording this transaction.

[NeilZ]

Thanks Jeff .. definitely going to run the transaction report to see what went on with that, but this is good info to finally balance it all out.

Thanks.