Re: Credit Card Accounting

[Luke <..hidden..>]

Replying rather late to this, after having read the thread...
(Haven't been to this mailbox since July)

On Thu, 30 Oct 2008, Munroe sollog wrote:

> Our company has a credit card, as I am sure most companies do.  I can't
> seem to wrap my head around getting ledger to account for the credit card
> properly.

Here is how we do such things.

If the credit card company is set as an account (E.G. 2150 - American 
Express), and that account is set to show up in dropdowns for payables
etc., you would use it just as you would use a checking account on an 
invoice.

For example: vendor "Stuff, Ltd." bills you for $500.
You create a vendor invoice for $500.
In the payments section, you enter $500, and select the AmEx account from 
the list of accounts you can pay from.

"The Big ISP Corporation" bills you for $104.27 for your SDSL connection.
You probably use an AP Transaction for that one, but same thing--choose 
"The Big ISP Corporation" as the vendor, and pay them $104.27 out of the 
AmEx account.

At the end of the month, the AmEx account has a liability value of 
$604.27.

You decide to pay $300 of that, so you can, as someone suggested, do a 
transfer between your checking and AmEx accounts to achieve this.  Just 
note "Web Payment", "American Express", and other such things, in the 
notes of the transaction.

Now, next month, in addition to your remaining $304.27, and what ever 
transactions were from that month, you maybe have a $9.96 finance charge 
from AmEx.

If you have an AmEx vendor, you can have that vendor bill your card 
account via a normal AP transaction, billing you for that $9.96.

This whole system, if I am describing it correctly, will also let you 
reconcile your credit card statements.

Regards,

Luke