Credit Cards for expenses

[NWBizMan]

Hello All! PT Accounting 2002

We often use credit cards to purchase expense items, not inventory, and sometimes due to cash flow contraints, pay off the credit card company over several months.

We have set up each credit card as a vendor and as an A/P account. We then entered the purchases using TASKS|PAYMENTS screen. We specify the credit card A/P GL account as the "Cash Account" on the Payments screen. We use the purchase date as the check number. We then complete the the entry by entering the appropriate amount(s) and expense GL Account number(s).

Our problem is that when we go to make our monthly payment from our checking account to the credit card company, our Payments screen doesn't let us apply a payment to the outstanding balance or even apply it to a purchase transaction. Also, the Payment entries for purchases don't show up on the Account Reconciliation screen.

We want to be able to enter purchases as they happen, then make payments, either minimum or full, against the outstanding balance. Naturally we also need to enter monthly finance charges as well.

What are we doing wrong?

[Robert Oyler]

I think you need to look at your procedure again.

It is correct to setup the CC company as an AP account. However, you problems stem from posting to Expenses from Payments screen. Peachtree is thinking you have already paid these items, which you haven't.

You should enter each monthly CC statement into Peachtree from the Purchases/Receive Inventory screen using the CC AP record and allocating the purchases to the appropriate expense categories. You would use an Invoice number such as May 2002.

Then when you do a check run, the outstanding amount owed for the month is displayed and you can pay all of it or partial.

When the next months statement arrives, only post the new transactions and any finance charges. When you run your next check run you can then pay from what was left over from a previous statement and any portion of the new statement.

This will accurately reflect your CC balances and propelry account for payments and expenses.

[NWBizMan]

Robert:
Many thanks for your help. I'll give your approach a try. It makes sense. I got off the track reading Peachtree's help screens. I'll let you know how I make out.
Thanks.
Dave

[dunk02]

Oyler has it right. Your entering expenses to your screen where the offset is the cash account. Enter the expense in the Purchase screen, where the credit is to a/p and the dr to expenses. Then pay thru the payment screen, where the dr is to a/p and the cr is to cash.

[Deborah Bean]

Sorry I didn't see this sooner, but I've been out of town working.

The best way to handle credit cards is to set them up as a Liability account in your GL. That way you can reconcile the account every month.

Attached is an excerpt from my book. Get it at Wordware.com.

[ValueAccounting]

I am also trying to setup my credit card accounts in Peachtree. On this discussion thread, I noticed that some users recommend using an Other Current Liabilities Account, while others recommend Accounts Payable. My credit card accounts are already setup as Accounts Payable. Should I change them?

Note, I am running my business on Cash Basis, instead of accrual. Does this affect credit card transactions in any way?

[David Palmer]

to Value Accounting:

If you want to report on a cash basis you don not need credit card liability accounts. Only when you pay the credit card bill you will appropriately enter the expenses.

[Lisa_p]

<<Only when you pay the credit card bill you will appropriately enter the expenses.>>

Yes, but that get's VERY tricky when you're carrying a balance and paying over several months. When you pay that $500 in May, how do you keep on top of which expenses you're paying from the February or March statement?