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Accounts payable

Track credit card purchases

The following example assumes you want to track the purchases on a credit card through each vendor along with paying the credit card company. The credit card statement has 2 charges totaling $401.98.
  • Ruth's Chris Steak $249.11
  • Best Buy $152.87
We will use the following General Ledger accounts used in this example.
  • 130 - Operating Account (current asset)
  • 230 - Credit Card - Visa (current liability)
  • 220 - Accounts payable (current liability)
  • 515 - Meals and Entertainment (expense)
  • 520 - PC Repairs (expense)
  1. Stage 1 — set up the credit card as a bank account.
  2. Go to
    Setup
    , then
    Bank Accounts
    .
  3. Add a bank account for the credit card company.
  4. Use the
    Credit Card - Visa account
     as the General Ledger account number.
    note
    You'll need a valid bank routing number.
    The Bank Accounts screen. The Main tab is active. In the General Ledger section, the Account box has an entry of 230.
  5. On the
    Check Layout
     tab, select a
    Vendor layout
     for Accounts Payable.
  6. Select
    Enter
     to save your changes.
  7. Stage 2 — set up the Visa credit card vendor.
  8. Go to
    Setup
    , then
    Vendors
    .
  9. On the
    Main
     tab, add the Credit Card vendor.
  10. In the Payment Preferences section:
    1. Enter the
      Bank account
       used when processing Accounts Payable.
    2. Choose the
      Method
       normally used to pay the credit card.
    The Vendors screen with the Main tab active. The Payment Preferences section is highlighted. Bank account has an entry of Operating Account. Method has an entry of Check.
    The Distributions tab of the Vendor screen. In the grid, there's 1 row. GL Account is 230, Description is Credit Card - Visa, and Amount is 0.00.
  11. On the
    Distributions
     tab, select the credit card liability general ledger account.
  12. Stage 3 —set up the vendors on the credit card statement
  13. Go to
    Setup
    , then
    Vendors
    .
  14. Add the individual vendors on the credit card statement.
  15. In the Payment Preferences section:
    1. Enter the
      Bank account
       used when processing Accounts Payable.
    2. Select
      Payment
       from the
      Method
       dropdown list.
    The Vendors screen with the Main tab active. The Payment Preferences section is highlighted. For Bank account, Visa Credit Card is entered. For Method, Payment is entered.
  16. On the
    Distributions
     tab, select the general ledger expense account.
  17. Repeat for each vendor on the statement.
  18. Stage 4 — enter the vendor payable.
  19. Go to
    Actions
    , then
    Enter Payables
    .
  20. Select the
    Detail
     tab.
  21. Enter the payable listed on the credit card statement for each vendor, debiting the correct account.
    The Enter Payables screen with the Detail tab active. In the Distributions sub-tab, the grid has 1 row. Account is 515. Account Description is Meals and Entertainment, Description is Ruth's Steak House, and Gross Amount is 249.11.
  22. Stage 5 — enter the AP Payment for the vendor.
  23. Go to the
    Enter Transactions
     screen through an AP Payment type transaction, then create the payment.
  24. For
    Bank account
    , select the credit card bank account (not the operating bank account).
    note
    This will result in a credit to the credit card liability account and a debit to the expense account.
    d
  25. Repeat for the credit card charges on the statement.
  26. Stage 6 — apply the payments.
  27. Go to
    Actions
    , then
    Manage Payments
    .
  28. Select the payable and AP payments from the credit card statement.
    note
    There should be a payable and payment selected for each item on the statement.
    1. Select
      Apply Payments
       to complete.
      This creates a debit to the expense accounts and a credit to the credit card liability account, with a wash through the Accounts Payable account.
    The Manage Payments screen with the Accounts Payable tab active. 11 columns of a grid are shown. The 3rd column, Apply, is highlighted. s highlighted The grid shows 4 rows, 2 for each vendor. In each of the 4 rows, the checkbox in the Apply column is checked.
    Cash General Ledger. Shows 4 accounts and their Current Amounts. For 220 Accounts Payable, the 2 amounts (152.87 and 249.11) are shown as credits and debits. For 230 Credit Card - Visa, the 2 amounts are shown as debits. For 515 Meals and entertainment, the 249.11 is shown. For 520 PC Repairs 152.87 is shown. The Report Total in the Period End Balance column is 00.00.
    Accounts Payable Accrual General Ledger. Shows 4 accounts and their amounts in the Current Amount column. In 220 Accounts Payable, there is a credit and debit for each of the 2 amounts: 152.87 and 249.11. There is also a credit and debit for the Payment Application for each of these amounts. In 230 Credit Card - Visa the 2 amounts are shown as debits. In 515 Meals and Entertainment, 249.11 is a credit. In 521 PC Repairs, 152.87 is a credit. The Report total in the Period End Balance is 0.00.
  29. Stage 7 —  enter the payable for the credit card statement.
  30. Go to
    Actions
    , then
    Enter Payables
    .
  31. Enter the total credit card amount on the statement as a payable.
  32. In the Distributions section, use the credit card liability general ledger account.
    The Enter Payables screen. The Amount box shows 401.98. The Distributions sub-tab has a single row. Account is 230. Account Description is Credit Card-Visa. Description is Citibank Credit Card. Gross Amount is 401.98.
  33. Stage 8 — pay the credit card statement.
  34. Go to
    Actions
    ,
    Manage Payments
    .
    The Manage Payments screen. Shows a grid with 13 columns and 1 row for the VisaCC Vendor. The 4th column, Pay, is highlighted and has a marked checkbox. The 13th column, Bank Account is also hightlighted and has an entry of Operating A.
  35. Pay the credit card company using the bank account normally used for payables.
    note
    • The final payment to the credit card company will wash through the Accounts Payable (credit) and Credit Card – Visa Liability (debit) accounts and Cash account (credit).
    • Filter Accounts Payable reports such as Aging Schedule to include the Operating Bank Account, excluding the Visa Credit Card Bank Account.  This will ensure the accounts payable reports reflect the true accounts payable balance.
    Shows the Filtering and Sorting section with the Vendor Transactions tab active. Filter By is Bank Account, Method has an entry of Is, and Selected shows Operating Account.
    Cash General Ledger Example. Shows a 401.98 debit in the 130 Operating Account. A 401.98 credit and debit in 220 Accounts Payable. A credit of 401.98 in 230 Credit Card Visa.
    Accrual General Ledger example. In 130 Operating Account, 401.98 is a debit. In 220 Accounts Payable 401.98 is a credit, and also a credit and a debit for the Payment Applications.

This article applies to:

  • Product: Accounting CS
  • Subject: Accounts Payable

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