When a credit card account is on the balance sheet as a liability, it must be set up as a reconciling account. The only way to do this is to set it up as a bank. To set up the G/L account as a bank, go to file > company > bank. In the bank section, select the G/L account. Input the branch and name of the account. In the check information section, input the account number but the ABA # and last check # can be input as 1. These fields are not needed by the system for credit card processing.
Input the AP invoice as usual. When the AP invoice is complete, select the PAY INVOICE button.
- After selecting the PAY INVOICE button, the Accounts Payable Checks screen will be displayed. Change the G/L Bank acct to the credit card account.
- Select Hand Check, type a Check #, and then click Print.
- Print a voucher if needed.
- General ledger impact:
- AP invoice is created - an AP source code is generated debiting G/L account and crediting accounts payable.
- In check print screen - when G/L bank is switched to the credit card and posted, a CD source code is generated debiting accounts payable and crediting the credit card account.
Example of Accounts Payable Check screen when credit card G/L account is selected.
For credit card charges that do not require an AP invoice, a journal entry can be made to debit the G/L accounts affected and credit the credit card liability account.
Example of Journal entry to use when entering miscellaneous charges that do not require an AP invoice.
- If an AP invoice is entered and will be paid by credit card, then in the check print screen:
- Change the G/L bank account to the Credit card account
- Select HAND CHECK
- Input Vendor
- Input check #
- Select invoice(s) paid by credit card
- Select PRINT and print a voucher if needed
- General ledger Impact:
Debit accounts payable and credit the credit card liability account
To make a payment for the credit card, a journal entry must be posted to debit the credit card account and credit the bank account.
The credit card account will be a reconcilable account in the bank reconciliation screen. To reconcile the credit card account:
- Go to accounting>bank reconciliation> bank reconciliation. Input the G/L account for the credit card.
- In the statement section, input the closing date of the credit card statement and the ending balance owed from the credit card statement. If there is a balance owed to the credit card company, the balance should be entered as a negative number (see below).
- Check off items in the reconciliation section of the bank screen. Charges input via a journal entry will be listed as a negative number. Payments made to the credit card will be listed as a CD source codes and a positive number.
- Only save the bank reconciliation when the out of balance (under the balance section) equals $0.
- In the bank reconciliation report, there is a section that is the bank to book reconciliation. There will most likely be a variance. This is expected since credit card statements dates are not at month end. In Inform, the general ledger will include activity until the last day of the month. Review the variance to see if the remaining activity represents the variance.
Bank reconciliation screen - the bank reconciliation can be saved when the "in balance" equals $0.
Bank reconciliation screen - Miscellaneous charges to the credit card entered as a journal entry.
Bank reconciliation screen - AP invoices charged to the credit card show as a CD source code.
Bank reconciliation screen - Payment to the credit card entered as a journal entry.