Credit Card Accounting

ClarkeyClarkey Member Posts: 16

Hi
I am new to accounting and confused about expenses paid for on a credit card. How do I record that I have paid for the expense on a credit card and then how do I record that I have paid the credit card bill? I really need a step by step walkthrough!

Many thanks for any help!

Comments

  • MikegMikeg Member Posts: 521 ✭✭✭

    @Clarkey,
    That is going to depend on whether the business account was used to pay the credit card bill or you personally paid for it. Let us know.

  • ClarkeyClarkey Member Posts: 16

    I have both scenarios. Mainly a business credit card paying for a business expense but sometimes I pay for a business expense on a personal credit card and then I need to account for it in the business.

  • MikegMikeg Member Posts: 521 ✭✭✭

    @Clarkey,
    For expenses on a personal credit card that is for business, you would create a journal entry (Accounting/Transactions top right More). Debit the appropriate expense category and credit owners contribution.
    For items on a business credit card that is not importing automatically, you have two options to enter the expenses. Either case be sure you have a credit card liability account set up in the Chart of Accounts. One is to manually enter each transaction. Go to Accounting/Transactions and add expense. Complete the details such as description, date, amount and category. Change the account box from cash on hand to credit card and save. Repeat for all transactions including payments. The payment would be add income rather than add expense.
    The second method is to download the statement into an acceptable format such as csv. Then import the transactions and categorize. Go to Accounting/Transactions/More import bank statement. Payments from your checking account to the credit card should be categorized as a transfer to bank/credit card. It should find the matching payment from the credit card transactions.
    I'm available for hire if you need further assistance at a reasonable hourly rate

  • ClarkeyClarkey Member Posts: 16

    many thanks for you help.

    I just want to check I have this right. I am manually entering to the Business account. I have a Bank Account set up (asset account) and a Credit Card set up(liability). For example, I spend 4 payments in a month on the credit card that gets added as 4 individual expenses against different categories and adds up to £100. My balance on the credit account is now showing in the top left of the screen as £100.

    At the end of the month, I pay a one-off payment of £100 from my Bank account to cover the 4 payments made on the credit card. I enter this single transaction as follows in Wave:

    Date: 31/11/2019
    Description: Payment to Credit Card
    Amount:£100
    Account: Bank Account
    WITHDRAWAL
    Under the Category, I select the option Transfer to Bank, Credit card or loan.
    Then I pick from the account list My Credit Card and save.

    I then end up with two new transaction lines as follows:
    1. Payment to Credit Card - Withdrawal - Account Bank Account - Category Transfer to Credit Card
    2. Created Transfer - Deposit - Account Credit Card - Category Transfer from Bank Account

    My balance on the Credit Card at the top of the screen is now reading £0.

    Have I done it correctly?

    Thanks

  • MikegMikeg Member Posts: 521 ✭✭✭

    @Clarkey,
    You got it. Things would a little different if and when you decide to attach your bank or import.

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