Credit Card Transactions

[Heidilr1]

I am new to Powerchurch and have a question regarding credit card transactions. Our church pays for many expenses with a credit card and then pays the entire amt. each month. As the staff hand in the associated receipts throughout the month, what is the best way to record these? Should we do this through A/P, and then when we pay the bill, just debit the "CC Vendor" we've set up and credit cash? Any suggestions appreciated!

[debbieg]

Heidi,
I'm fairly new at this myself but I think you are on the right track. If the credit card is just used for various stores like office supply, food, maintenance material, etc., I think you would have a line that credited the checking account and then multiple lines to show a debit for each use of the card. Of course, that assumes that a given transacation was all for the same expense account. I guess if you went to one store and used it for items that were in different expense categories, you would just have that store listed multiple times.

Example:

credit 01-1100 Checking Account Big Bank Master Card $500.00
debit 01-5100 office supplies Staples $ 50.00
debit 01-5200 computer stuff Staples $200.00
debit 01-5300 Hostess comm. Giant Food $100.00
debit 01-5400 Sunday School Lifeway $150.00

Someone, please correct me if this is wrong.
Debbie

[wms7328]

Debbie is correct, you can just enter the expense categories when you enter the payment for the credit card. However, depending on your billing cycle and how much it is used, you may find expenses that are entered during the month that are not included on that month's credit card bill.

Another way would be to create a liability account for the credit card. Then post all expenses as a credit to this liability account and debit to expense account. When you pay the credit card bill each month that payment would be posted as credit to your bank asset account and debit to credit card liability account. You could also use the reconcile feature to clear all the expenses that were paid each month and see if there were any that were not included in bill or more likely some that you had not entered as expenses. At any time the balance of the credit card liability account would represent what you owed on the credit card. This might also be helpful if you are using different funds since the liability account could be assigned to any of your accounting funds.

Hope this is helpful.

[songbird331]

When paying a credit card bill, how do you enter a 'credit' that was applied to the bill?

[JohnDMeyers]

We enter it as a negative expense on the same line item as the original expense:

$50 refund:
DB 01-1110-000 checking $50
CR 01-5180-000 original expense $50

or you can also create a separate income line item for refunds:

$50 refund:
DB 01-1110-000 checking $50
CR 01-4180-000 refund income $50

[songbird331]

Do I CR checking (statement amount), DR credit card (statement amount), and CR credit card ('credit')?
Thank you...

[JohnDMeyers]

Not sure if I understand.

You would Debit your checking account if you received a refund. If you see the word "credit" on your bank statement, it means something different that the use of the word in PowerChurch.

You need to "Credit" one other account. It would be either and expense account, or an income account. I suppose it could be a liability account if you have your credit card setup as described above.

[songbird331]

I apologize for misunderstanding...we received a 'reward' check and it was applied to our credit card. The balance of the statement is total charges less the $ reward amount. Right now the total of my credit card charges is more than the actual $amount owed.

[JohnDMeyers]

Technically, the rewards points could be counted as new income.

What we would do is DB checking and CR the expense account, and allow the expense account to go "negative" until we used the rewards points.

If you are using a liability account for your credit card, you would DB checking and CR the liability account, which will also show a "negative number" in the liability account until you use the rewards points.

Lots of options. You can CR income, CR expense, or CR liability, and any would be ok.