I’m sure most of us have rewards credit cards. How do you enter the cash back that you receive? On my old accounting program I simply made a Journal entry debiting the credit card account and crediting the “Other Income” account, but how do you do that with your program?
There are two possibilities, both very similar to what you are familiar with. The one difference is that in Manager, you cannot enter cash or bank transactions via journal entries. With either approach,
Receive Money into the bank account that you have set up for the credit card (assuming you did). Allocate the transaction to either:
Other income. This is what you are familiar with. It will show up as revenue. OR
Bank fees. It will show up as a contra entry in that expense account. Enter the amount as a positive number. Manager will reverse the sign because it is a receipt allocated to an expense account.
Whether you like the second option may depend on how many other bank fees you have. If there are a lot, the refund will simply reduce the total. If there are few, you may end up with a negative balance in an expense account, which isn’t incorrect per se, but which admittedly looks a little strange and you might not like. Either way will produce the same net result in your profit and loss statement.
As a note, changes to the program have been promised that will allow you set up a credit card as a liability account (which it technically is) rather than treating it as a contra asset account. The reason to do the latter currently is that you gain all the feature benefits of uncleared deposits and payments, spending and receiving of money, transfers, etc.
Thanks, Tut. That worked just fine.
It will really be a plus when Credit cards are treated as liabilities and not contra bank accounts.