If you chose not to record finance charges and fees as part of your journal entry then include a second GL Account number for your credit card fees expense account.Check the box to Automatically Import these items.Place your liability account under the GL Account column (the account the payment is applied to).Use your actual bank account as the Checkbook (the account the payment comes from).Set up the Standard Account Numbers for the vendor.Enter the credit card company as a New Vendor.Other Assets: If your new items include any Depreciable Assets (like office equipment, furniture, computers, etc.) be sure to increase the appropriate asset (like 1100.00 Office Equipment) don’t count it as an expense.If you spent all the cash already then just enter the appropriate GL Account numbers for the expenses. Cash Advance: If your new items included a Cash Advance you’d probably want to show this as an increase to your Petty Cash Asset Account – be sure to keep all your receipts for the cash you spent.This will make the Debit and Credit columns match so it is a “balanced” entry and can be posted. Offset the new purchases and finance charges by showing an INCREASE in your Credit Card Liability account of the same amount, say $1,000.The total of the journal entry should be the amount of all new purchases plus the finance charge, for example $1,000. Enter an additional line for the finance charge expense, if any.It may take several lines if you’ve purchased items that fall into different categories. For each new purchase enter the amount with the appropriate GL Account number, for example 5000.00 School Supplies.If you make individual entries the finance charge will be entered at the time you make a payment. Make a Journal Entry when you receive your credit card statement (example below), or make individual entries each time you make a purchase with your credit card. Create a Journal called “Credit Cards” or you may prefer to have a separate journal for each card.Enter Beginning Balances for each credit card.Add an Expense account for credit card interest & fees.Create Liability accounts for each credit card you use.In this article we’ll explore the optional method of using liability accounts, however, there are several advantages to using the Contra Asset Approach. The balance owed on a credit card can be treated either as a negative asset, known as a “contra” asset, or as a liability. This article describes an optional approach to tracking credit card purchases and payments by making journal entries and using liability accounts to track credit card balances.
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