User Support Forum

How do I setup credit cards in the Chart of Account? It would be nice to track the balance on a credit card, and also see where the expenses went. And then how would I enter the payment to the credit card?
Is a credit card a liability, or balance, or expense? Or should it be a totally new fund?
And when I would use Open Invoices, how do I enter the transaction lines? Obviously I make the expenses (so we can track the expense categories), but how to enter for the liability. The check would go out of the checking account.
Thanks
Werner Morgenstern

Credit cards are liabilities. Accordingly, set up a liability account for each credit card account that you want to keep track of. As charges are made on the account you would record the following journal entry:

Debit the applicable expense account
Credit the credit card account

Then, when you pay the credit card balance you would make the following entry:

Debit the credit card account
Credit the bank account.

This is great to know!

I have 3 questions:
1. As you enter this information, are you able to run reports for the expense categories before the check is actually printed?

2. If you are entering the information from receipts as you receive them...does PowerChurch keep the items as entered or "Clump": ie. kids, music, office. In Maintain Open Invoice, it does not clump and I have created an Excel spreadsheet so I can add the total of ie: all kids expenses and just enter that total on my check.
(Ie....if I'm entering two checks for the same vendor in Maintain Open Invoice; PowerChurch "clumps" the total & writes one check when I want two checks because they are for 2 different pay periods. I've learned to just write one check, print it and then write the other.)

3. If you can't run a report, why is this better than entering the information in Maintain Open Invoice, but not writing the check or posting it until you are ready to pay the bill?


This is one of those, the more I look at it, the more I get confused. I'll go play with it. ~Kristi~

Kristi,

In response to your questions:

1). Under this method you can run an Account Activity report on the liability account and/or applicable expense accounts to see all the individual charges, assuming you enter the original transactions in Fund Accounting as I explain in #2 below. The level of detail you will see here will be dependent on the level of detail you use when inputting the original transactions.

2). Under this method you should not use the Maintain Open Invoice screen to enter the information from the receipts. Instead, enter the transactions as journal entries in Fund Accounting. Only use the Maintain Open Invoice screen when you are ready to write the check for the credit card bill. When you write the check you will debit the liability account and credit the cash account for the lump sum amount of the bill.

3). This method is better if you want to keep close track of what you have charged throughout the month so you aren't surprised when you receive the bill. It's also better because the purchases are posted in Accounting at the time of purchase instead of when you pay the bill. This gives you have a better matching of income and expense.

Matt

We just stumbled upon this entry and have, consequently, decided to re-set up our main church charge accounts (Visa, Lowe's, Sam's Club) as liability accounts.

But I have a few questions:

First, we would like to start entering receipts as purchases are made (for an expense, debit the applicable expense item and credit the [Lowe's] liability account, or for a return, credit the applicable expense item to "lessen" the actual expense instead of inflating income, and debit the [Lowe's] liability account). However, many times (always with the Visa), there will be multible funds/checking accounts involved (all the same checking account, but split out into different funds). When it comes time to pay the bill, we can't just debit the charge account liability and credit the bank account -- there may be multiple bank accounts involved. Is there any way to determine which bank accounts -- and for how much -- other than running an account activity report, printing it, and manually going through and adding up the bank account funds?

And in relation to my other question, my PC trainer, Marilyn Waterman, gave this advice:

"When you have a refund or credit the best way is to do what you
mentioned but do not try to tie it to any earlier transactions, just do it
as it appears on statements or arrives by mail like in a rebate form. For
example: You buy a computer and pay the full amount charging it to the
expense account 5XXX (whatever it is). Until the rebate comes in your
expense for computer equipment will be the full amount you paid. When the rebate comes in you credit that expense when entering the deposit in
"enter transactions" instead of crediting an income account and now the expense truly represents the amount you pay for the equipment and you have not inflated the income since it is not income. If you get a refund or credit on a card when the statement comes in you will enter a transaction for the credit and credit it to whatever account that you debited (expensed) when the charge was originally made. This now evens the amount that was actually expensed for the item or charge."

HOWEVER, when we entered the info. like she said in maintain invoices (several charges, one return/credit on a monthly statement) and tried to print the check, PC added all the credits together, ignoring the fact that one was a RETURN/CREDIT instead of a payment. We ended up "making do" by entering all the info. in fund accounting, enter transactions, then hand writing a check and entering THAT in manual checks. Yuck. So unprofessional. But I don't know how else to deal with this, except for creating a liability account, which I am also struggling with (see question #1).

Thanks so much for your help -- I look forward to hearing back soon!

Laurel Fisher
Williamstown Assembly of God
Williamstown, KS

Laurel,

Regarding your first question: As you have figured out, it can be tedious and time consuming to determine how to split a payment to a credit card issuer if the charges need to go to multiple funds. We have the same situation at my church. I have not found a good way around this. It's not a problem with Powerchurch--it's really an issue with how you have your accounting set up and how your church wants to run things. For example, one solution would be to have separate credit card accounts for each fund. Another solution would be to just have one fund instead of several. However, neither solution may be acceptable depending on your church's situation and needs. You will need to decide which mode of operation is best. Unfortunately, I have found that sometimes the accounting piece has to be cumbersome in order to satisfy the financial and operational needs of the pastor and church board.

Regarding your second question: Without actually seeing what you did it's hard to determine why you had the problem you did. Something wasn't done right because Powerchurch has the capability to handle this situation correctly. For example, let's say you have two credit card charges--1 for $50.00 and 1 for a credit of $15.00. Thus, the net check amount you want to cut is $35.00. When you enter an invoice in Maintain Open Invoices, input $35.00 for the amount. Then, when you enter the account breakout, credit the cash account for $35.00, debit an expense account for $50.00, and then credit an expense account for $15. When you go to save the transaction Powerchurch will come back with a message saying that the debits/credits are out of balance with the invoice amount. In this situation this is ok. Just click yes to save the transaction. Then, when you go to print the check it will print for the $35.00. And, the $50.00 expense and $15 credit will post as debits and credits to the appropriate expense accounts.

Another way this could be done is enter two separate invoices--one for $50.00 and one for ($15.00). When you go to cut the check Powerchurch will net the two invoices together and print the check for $35.00.

I hope this helps.

Matt

Matt,
Thanks for your reply. On the first question ... actually, I figured this one out! Yay, thank you God! Here's what we ended up doing (and it appears to work).

We set up three liability accounts (Lowe's, Sam's Club, and Church Visa), and then linked ALL the church funds, except Assets/Liabilities, to each of those three liability accounts. So, General Fund, Building Fund, Missions Fund, etc. each have their own three liability charge accounts.

Then, we entered the individual receipts (one receipt per screen) in "Enter Transactions," debiting the applicable expense account (i.e. E-Gen Fund Office Supplies), and crediting the applicable charge account (i.e. Sam's Club Liability) IN the applicable fund (i.e. Gen Fund).

When the monthly statement comes or it's time to pay the bill, we write the check from "Maintain Open Invoices" (one screen only) for the lump sum of the statement (***), debiting the applicable charge account(s) in the applicable fund(s), and crediting the applicable bank accounts(s).

***Of course, before paying the monthly statement -- and after each time a receipt or batch of receipts is entered, to check that entry was correct -- we will run an "Account Activity" report (leaving the Accounting Fund field blank so it includes all funds, but selecting only that particular liability, i.e. Lowes, in "major accounts"). We found that it's important to UNCHECK "include zero activity accounts," so that only the funds actually used will appear, one per page, but with a total from each fund used. Each fund shows charges, returns, and the running balance/total.

And on my second question ... your suggestions are a little different than what we had tried. We will try again. : )

Again, thanks so much for your answers! I have served my church as Secretary/Treasurer since June '99, and as Administrative Assistant since Jan. '01. I've been using PC since Jan. '04. This is my last week (I've resigned to pursue FT schooling), and the PC forum has been SO helpful. I feel much better about leaving things for those who are "replacing me," knowing that they, too, can use the PC forum as a resource.

Blessings,
Laurel
Williamstown Assembly of God
Williamstown, KS

In Laurel's message below she said she set up three liability accounts and then linked those to all the other accounts except assests and liablities. How excatly do you link those??

Also how would you go about setting up a loan? We have our assests and liability fund, but the amount we of principle we pay each month does not come off of there - Also we having a building account in which we have borrowed money and are paying the interest each month - and I am not sure how to set that up???

I would greatly appreciate your input.
Thanks
Dawn