Processing Payables for Credit Card Payments

In the case where you make a payment with a credit card or if the credit card company automatically debits a transaction, here’s a suggested practice:

• Create an A/P demand check for each entry on the statement. For cash account, use the credit card liability account. For expense account, use the actual expense account. Use the correct vendor. If you are not tracking vendors for 1099, use the firm’s credit card vendor.

• When you pay the credit card bill, again create an AP demand check for the payment. But this time, the cash account is the account the money came out of for the payment, and the expense account is the credit card liability account.