This article will explain how to create vendor payments with a corporate credit card against A/P invoices. Journal entries are part of the illustration.
There are 2 options in applying the payment; one is before the A/P invoice is added and the other is through the outgoing payments window.
- Payment will be applied before the invoice is added for point-of-sale and internet purchases.
- Payment will be made through the outgoing payments window for invoices with extended payment terms (e.g. net 30). These payments will be crediting the corporate Credit Card Payable instead of Cash.
If one does not exist, create a G/L Liability Account called Credit Card Payable
Online or POS purchases - payment is made before the A/P invoice is added
From the A/P invoice screen, click on the Payment Means button. Select Credit Card tab. ***Very important: Enter the G/L Account of Credit Card Payable.
Add the A/P invoice. We will show example journal entries for a running total on 2 purchases. Here's the first journal example for a $500 purchase:
Expense Inventory
500 |
Credit Card Payable
| 500
Invoices with Extended Terms - purchases that are paid after the invoice is received
Open the Outgoing Payments window and select the vendor and invoices being paid with the credit card.
Click on the Payment means button. Select Credit card tab. *** Very important: Enter the G/L Account of Credit Card Payable.
Example journal entry for a $750 purchase:
Invoice:
Expense/Inventory
750 |
Accounts Payable
| 750
Payment:
Accounts Payable
750 |
Credit Card Payable
| 500
| 750
When the credit card statement arrives, all of the charges that were applied to A/P invoices will get coded as a debit to Credit Card Payable. The sum of those items should total the balance in the credit card payable account. Journal example:
Credit Card Payable
1,250 |
Accounts Payable
| 1,250
If there are other charges that did not already have an A/P invoice, those charges could go through the above process, or simply be coded directly to the appropriate expense account or inventory item.
Once the credit card statement is entered, the G/L liability account should reconcile to 0 unless there is a timing issue and charges for the next payment cycle have already hit. If there are aged items in this account they need to be resolved.
About us: Aether Consulting is a Gold SAP Business One reseller partner located in Michigan.
