Entries for credit cards

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1

Hello Forum - I am a newbie to Manager.io and am still learning the software. I am also not super great at double entry accounting and need help.

My specific problem is properly categorizing transactions where a purchase is made on a business credit card. I am importing bank data into Manager and that is working fine. The problem I am having is reconciling the credit card. I thought everything was working fine but the transaction details in the Bank Reconciliation environment show negative numbers where the entries should be positive and vice versa. Somehow debits and credits are reversed or something.

The credit card is set up as a Liability account.

I have been categorizing the “payments” transactions from the imported bank data as follows:

  1. Paid From Account: Credit Card
  2. Account: [name of Expense Account]
  3. Amount: is a positive number, coming from the bank feed

This makes sense to my brain because a third party got “paid” using the credit card and the type of expense is where I want it to be categorized.

The problem I do not know how to solve shows up when I try to reconcile the credit card account.

When I put in the opening and closing balances, it shows as “not reconciled.” Manager is capturing the right line items in the Bank Reconcilation -Edit screen but the signs are reversed.

Is a simple solution to enter the balances as negative numbers or something? An outstanding positive balance for a liability account on the balance sheet should be a positive number.

This is probably rudimentary to most of you but I am not an accountant and just need a simple explanation or help here.

Many thanks in advance!

JSP

2

Hello @jscott2026,

Welcome to the forum.

The best method imo, is to create your credit card as a Bank or Cash Account.

To do that, you first need to create a control account from Settings > Control Accounts > Bank and Cash Accounts

From there create a control account to hold your credit cards under Liabilities.

Then, you can go to Bank and Cash Accounts and create an account for your credit card under the control account you just created.

This way you can use your credit card to create Payments normally.

In order to reimburse your card, you can use Inter Account Transfers

3

The forum is not for accounting help, but for use of Manager. In many forum topics reference is made to use the free accounting learning resource https://www.accountingcoach.com/ which explains very important basics such as:

  1. The accounting equation(helps to understand the balance sheet info (left-side of Manager summary screen) https://www.accountingcoach.com/blog/accounting-equation
  2. The profit and loss statement (right-side of Manager summary screen) https://www.accountingcoach.com/blog/what-is-the-profit-and-loss-statement
  3. And understanding how Debits and Credits works. This is the most important part to learn.The pretty extensive guide at https://www.accountingcoach.com/debits-and-credits/explanation helps you to understand how it all works.
4

Yes. When entering the balance reported on the card statement it should be entered as negative (because you owe money to that account). If you were entering them as positive numbers, switching them to negative should clear up the “Not Reconciled.”

Not strictly. This can be a little wonky but, by convention, all balances on a balance sheet are shown as positive numbers; the trick is knowing whether those positive numbers represent debits or credits.

Liabilities are credits, which accounting programs generally handle as negative numbers (this is why the transaction details in the Bank Reconciliation are showing as negative; by using a credit card you’re borrowing money, so you have a liability and all the amounts are credits). Then by entering the statement balance in the reconciliation as a negative you’re basically telling Manager “I have a credit balance on this account” and Manager can check whether that credit balance equals the total of the credits in the transaction detail.

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thanks p4unger for your response. That is helpful.

6

thanks for the reply Ealfardan. I will dig into the control account method more. I think that is the way to go.

7

Thanks eko, those are great references. For what its worth, I think my accounting understanding was enough to figure out I have an issue, and the issue is really figuring out how to do this correctly in Manager. So I will keep plugging away.