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ekuemoah
05-08-2012, 08:18 PM
I have a credit card. I get the credit card statement after I close my books for a period. The credit card includes charges that I did not record in my books. They were expenses incurred or posted during the period. I already closed expenses for that period. The credit card shows the date that the expenses were posted. How do I Journalize these charges?

1. Do I record the date the expenses were posted to the credit card as shown on the statement or do I use the date that I received the credit card statement and recorded the transactions in my book as the date in my General Journal?

Ex. Credit Card Statement
4/5 Purchase $45.00

I received the statement on May 3, 2012. I closed expenses for April on April 30. How do I record it in the books
Do I do this

5/3 Expense 45.00
A.Payable-Credit Card 45.00
(record purchase on 4/5)

Do I then close the amount after recording it to Income Summary so that it will be recorded as an expense in April and not in May?

Thank You.

jamesray50
05-09-2012, 10:46 AM
Hi Ekeumoah - First of all, you are closing your books too early. This is a good example of why you would want to wait a few days into the next month, so that you can post any additional transactions from credit card and bank statements to the prior period.

If you are on an accrual basis, you will want to post the transaction with the date you incurred the expense, in this case April. On a cash basis, you would record the expense with a date of the date you actually paid for the expense. In this case, it would still be April because you paid for the expense with a credit card. Your credit card payment will be a May expense.

If you are closing your books on the last day of the month and make changes to the prior month after you have closed, you will have to restate your Financial Statement. In other words, you will have to rerun them. If you don't have to give copies to anyone, for such a small amount I wouldn't worry about restating them. But, in the future, you should wait until you have received all bank and credit card statements before closing prior months.

Hope this helps.

Evan
05-09-2012, 11:21 PM
On a cash basis, you would record the expense with a date of the date you actually paid for the expense. In this case, it would still be April because you paid for the expense with a credit card. Your credit card payment will be a May expense.

Though for income tax purposes, credit card charges are considered "cash". So if you charged your credit card for $50 on December 30th and didn't pay it until February, in theory that $50 is a December expense...

jamesray50
05-10-2012, 10:32 AM
I agree, the expense paid for with a credit card is dated the date of the expense. But, the payment for the credit card is not an expense, it's a liability payment. The expense has already been recorded. So, the answer to question is to record the credit card expense on the date of the expense.

Evan
05-11-2012, 06:11 PM
I agree, the expense paid for with a credit card is dated the date of the expense. But, the payment for the credit card is not an expense, it's a liability payment. The expense has already been recorded. So, the answer to question is to record the credit card expense on the date of the expense.

Also correct, but people often get "held up" on that point. :)