Credit Balance on CC bill

[TBCgunni]

I have a CC bill with a credit balance but there are transactions on it. Credit bigger than spending items. How do I post that in PC?? Thanks - Elida

[JohnDMeyers]

I'm not sure I totally understand the question.

We pay the credit card when it comes in like this:
CR 01-1110-000 checking $400
DB 01-2310-000 credit card liability $400

Then our bookkeeper collects receipts from the authorized users in the following days and weeks and reassigns the amount in the liabilities to individual expense accounts, like this:
CR 01-2310-000 liability $400
DB 01-5460-000 office supplies $100
DB 01-5130-000 books $300

[NeilZ]

John,

it sounds like either something was returned, or someone paid the bill twice

[TBCgunni]

We had several credits on the bill along with charges - but the credits are larger than the charges - so there is a credit balance with the CC. Wondering how to show that??? Elida

[JohnDMeyers]

We had a credit from a hardware store that was more than any expenses we owed.

I had to setup an asset in "OTHER ASSETS" to keep track of that amount. This may be similar. You will also need an income account.

DB 01-1710-000 Credit Card credit $50
CR 01-4170-000 Credit Card credit $50

Then, when you charge $100, sometime in the future:
CR 01-1110-000 checking $100
DB 01-2310-000 credit card liability $50

Then our bookkeeper collects receipts from the authorized users in the following days and weeks and reassigns the amount in the liabilities to individual expense accounts, like this:
CR 01-2310-000 liability $50
CR 01-1710-000 Credit Card credit $50
DB 01-5460-000 office supplies $40
DB 01-5130-000 books $60

[TBCgunni]

I am sorry but that does not makes sense. Can you or someone elaborate on that or is there a simpler way???

[NeilZ]

I am sorry but that does not makes sense. Can you or someone elaborate on that or is there a simpler way???

It depends on how you want to handle that credit. First off, where did the credit come from, overpayment, return of item??

This may not be proper accounting but it will work:

If its an overpayment, you may just want to just pay the next month's amount due, and only expense that area where the overpayment came from for the difference between what a purchase was and the credit:

Example: You overpaid $20 to a CC, with the amount credited against the Worship Ministry account, so there's a credit. The next month the Worship Ministry spends $40, so all you do is pay the amount on the bill, but expense Worship for $20, since the previous overage came from there.

If its a return, then you may just want to do the same thing the next month. Just make note of the expense account originally credited with the item returned.

I think what John has listed there, is if you'll be expecting a credit on every or every other bill.

[Matt]

The correct way to do the accounting for credit card charges is as follows:

1). Purchase made: Debit an expense account and credit a liability account.

2). Paying the statement balance: Debit the liability account and credit the checking account.

Assuming the accounting is being done in this manner the credits on the statement should be posted as follows: Debit the liability account and credit the expense account that was originally charged for the purchase.

Since the credits on the statement are greater than the charges this will create a net debit balance in the liability account as of the statement date. This debit balance will remain until enough future charges are posted to offset it. If the credit balance on the statement is refunded in the form of a check post the refund when the check is deposited as follows: Debit the checking account and credit the liability account.

[JohnDMeyers]

Matt:

It made me laugh. We started out doing what you said. Now, the credit card bill comes due before we get all the receipts from our credit card users, which is why I have the order reversed.

[TBCgunni]

kIM AT AN ANSWER TO PRAYER SAID TO NOT DO ANYTHING WITH IT TIL YOU HAVE A BALANCE TO PAY - THAT MAKES THE MOST SENSE TO ME AND EASIER....THANKS - Elida