Quicken & Other Budget/Accounting Software/Credit Card

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Question
QUESTION: Hi,

Our company have 2 corporate credit cards with a credit limit as below :

Mastercard - $50,000
Visa - $20,000

September statement showed expenses as below :

Master card - $40,000
Visa - $ 15,000

The payment for the above has been paid via auto debit from company's bank account.

My question is :
1) How to record the credit card transaction as above both for mastercard and visa?

2) Both credit card is under Liability? If not, please advise under which type in the chart of account.

3) Do i need to record the credit limit for both cards?

ANSWER: There should be 2 separate Liability accounts in your chart of accounts
a) one for Mastercard
b) one for Visa


1) How to record the credit card transaction as above both for mastercard and visa?
When you make a payment to the credit card company, post that payment to the liability account.
When you make a purchase, paid for with the credit card,  create a tranaction that
will increase the liability account and post to the expense.
In QuickBooks - we have a transaction type that does this for us. Banking menu > enter
credit card charges.  If your software does not include this transaction type, use a journal
entry.


2) Both credit card is under Liability? If not, please advise under which type in the chart of account.
Keep a separate liability account for each credit card account.  The balance in the
account in your books (on the statement closing date) should agree to the Statement
bill.

3) Do i need to record the credit limit for both cards?
No, this is not necessary. Only record the purchases and payments to the credit card

Linda Saltz, CPA
http://www.qbalance.com
Advanced Certified QuickBooks Advisor

---------- FOLLOW-UP ----------

QUESTION: Hi,

What is the entries to record expenses paid via credit card?

Answer
Debit Expense account- the appropriate expense for the purchase
Credit  - the appropriate credit card liability account
MEMO - enter the name of the vendor /payee and what was purchased.
date = date of purchase

So it is a good idea to log into the credit card website to get the current charges
each week.  Otherwise it can be a daunting task.  Plus you want to get the charges
posted in the period that the purchase was made

Linda Saltz, CPA

Quicken & Other Budget/Accounting Software

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Linda Saltz, CPA, QBalance.com

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QuickBooks best practices, troubleshooting, accounting, tax We have over 70 pages of website content about QuickBooks tips, running a business, tax and business startup at http://www.qbalance.com

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Accountant and CPA over 20 years. Specializing in accounting software for over 12 years, Certified QuickBooks Pro Advisor, QuickBooks seminar instructor since 1997.
Producer of www.QBalance.com over 100 pages devoted to QuickBooks help and support and training for small business owners in tax and accounting issues.

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