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Moving/Offsetting A Credit Entry - Credit Card to Asset Account

This pertains to household accounting; not business. Material was bought for an insulation project. The total cost was recorded as a House Improvement. However, there was a promotion from the insulation manufacturer to receive a $75 cash card form the merchant. In the Credit Card account I used to charge the transaction, I entered the full charge of the insulation then - as a reminder to myself - made a credit entry for the $75 at a future date.

Weeks later, a card arrived for the $75 so I set up an Asset Account which charged the transaction against the insulation project expense (House Improvement) bringing my total cost in line with the true cost. But this shows the $75 coming from thin air. which is OK provided I go back to the Credit Card account and delete that credit (reminder) entry I made.

Is there a better way to handle this or is this good enough? It probably is for me but if I were running a business, I'm sure it wouldn't be. Would appreciate comments on leaving it the way I plan (deleting the original credit entry) and the proper way to handle such a transaction.

Reply to
John Gregory
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What I'd do is:

In the original purchase for "Home Improvement", I'd split one of the transactions and direct the $75 to my "Receivables" category. This would BOTH, reduce the "Home Improvement" total cost AND fund the $75 card.

Then, I'd spend the $75 out of Receivables. I'd use Classes to track the amount spent/remaining on the card (if I didn't spend it all at once).

db

Reply to
danbrown

I'm not following you, Dan. I'm on a cash basis; I have no receivables. No business involved. When I review my list of accounts I find the following categories:

Cash Flow Accounts: Spending and Credit cards. Investing accounts: Investment Accounts and Retirement Accounts. Property & Debt Accounts: Asset Accounts

That's it; no Receivable accounts. Can you be a bit more explicit please.

Reply to
John Gregory

Cash basis and "receivable" are NOT mutually exclusive.

For example, when I travel on business, I'm on an expense account. If I charge something (dinner?) on my credit card, the "category" is "Receivables". It's NOT AN EXPENSE. It's monies that are owed to me ... i.e., they're receivables. When I get the expense reimbursement, that's deposited to the bank with a category of "Receivables" ... thus clearing the prior expenses.

"Receivables" is an "Property & Debt"/Asset account that I've created. It represent monies OWED TO ME, just like the $75 is owed to you.

db

Reply to
danbrown

I thought about the issue a bit more before I got your reply and made an adjustment. Though I had no "receivables" up until the $75 credit, I saw no reason why I couldn't create one. I took the account I set up to hold the $75 - Home Depot Cash Card - listed as a "Spending Account" on my Account List, went back to my original charge for the insulation I bought, and split the transaction as you suggested, transferring $75 to the "Home Depot Cash Card" account. I then went back and deleted the other feeble attempts at this entry I described earlier. Everything appears in balance... and I understand the mechanics. Thanks for your help, Dan.

Reply to
John Gregory

I better choice of name than "receivables", is "reimbursable expenses".

I, however, prefer to use an asset account I call "clearing account" to temporarily hold such things. It is easy to see when the value is not zero and therefore something is not yet cleared.

Reply to
vodil

You're right, Vodil. That would be a better handle for the account.

Making the split entry at time of purchase as suggested threw the $75 credit into an account called "Home Depot Cash Card" which is listed as a "Spending Account" under Cash Flow Accounts. That permits me to see the value as well... just as an Asset account does.

Reply to
John Gregory

The name's not important (call it "Tomorrow" if you wish). What's important is that YOU understand that it's monies that are owed to you.

That said, I would recommend that you use a generic name ... so that in the future you don't wonder why you've got (for example) a reimbursement from your employer (or from Lowe's Hardware) listed in the "Home Depot" account.

db

Reply to
danbrown

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