Paying the group dinner with a credit card

Hi, Walter.

Your credit card company doesn't know (or care) about those other people. They still expect the full $120 from you, so record a Split transaction in that credit card Account. Charge $20 to Dining and $100 to your Asset Account named Cash.

If the other diners did not reimburse you immediately, you would need to Split the entry further to show the amount due from each in an Asset Account. When you collect from each, you would record it in your Cash Account with a credit to the appropriate receivable.

RC

That makes sense. Thanks. I have not used a Split before.

Another question: I used my credit card for something that I purchased for the company that I work for. I later filled out an expense report at work, and then received a check from the company that I work for, that I then deposited in to my checking account.

How should I treat the entry in the credit card account? and how should I treat the deposit in the checking account?

Thanks,

Walter

Hi, Walter.

The same idea applies, of course. You put the charge on your card, so you owe the card company. But it was not YOUR expense; it was the company's expense. So you have three ways to choose from.

1. When you pay the company's expense, whether by cash or credit, don't put it in an expense category. Create - or add to - an Asset Account with an appropriate name, such as Due from Company. Then, when you get the reimbursement and record it in your Cash or Checking account, credit it back to Due from Company. This way, the expenditure never shows up in your expense category at all, which is as it should be.

1. Create a new expense category called something like Reimbursable Expenditures. When you get the reimbursement, credit it to this category. At year-end, the category SHOULD have a zero balance.

2. Charge your expense category, just as if it were your own expense. Then when you get repaid, credit this category. This is not the correct treatment, but it SHOULD zero out anyhow.

It's your set of books, Walter, so it's your choice. But the first way is the correct one. It may be a new idea for a non-accountant, but it's the way that gives you the clearest picture at all times of your expenses and your assets.

RC

RC's way should be fine, but I'll mention what I do, which is only slightly different:

I record two transactions, both categorized as Dining, one in the CC account for $120 and one in the cash account for $100. Since the two have opposite signs, the net effect on the Dining category is $20.

"R. C. White" wrote

(snip)

I did a variation of this by appending a class with the CO's name (such as /Aerojet). Personal reports simply omit the class Aerojet. A class report for just Aerojet created my expense/reimbursement report for that CO.

Based on old suggestions from the good folks here, some time ago I set up a [Rebates & Refunds] cash flow account. This serves to track pending items like mail-in and travel rebates as well as one-time amounts individuals owe us - and which do not merit separate accounts, categories or classes.

So, for the OPs dinner, my CC acount would have a split $20 Restaurant or Dining expense and $100 [Rebates & Refunds] transfer. The transfer appears as an Increase in the R&R account. Amount owed the CC company is still $120.

When the nice people at dinner give me the appropriate funds they owe, they get entered in R & R as Decreases, with category as a [cheking-or- savings-account] transfer. This would be the real-life bank account where I deposit the friends' checks. I am sufficiently persnickety that if I don't deposit immediately, the category becomes [Cash Account], and when I finally get around to depositing the checks, there is the appropriate entry decreasing [Cash Account] and recording a deposit in the checking or savings account used.

Rebates are entered in the R&R account as Increases, as soon as I know/ think I'm getting one. It stays engorging the R&R account total until received. This was one of the suggestions for tracking pending rebates that often takes weeks/months to arrive. Ideally, the R&R account should have a zero balance, which tells me my "debtors" have coughed up what's coming to me.

Al

The most helpful thing to always remember as you continue to use Quicken is "Always follow the money". Meaning: make sure that you're recording things in away that tracks what you need to track and a way that you can understand.

You got great advice from RC White (as always) and everyone else. I take the approach that Ken Blake mentioned because I find it simpler, and also much simpler to explain to my wife. She is the other person that enters things in Quicken for us. Since the categories balance out, any reports or budgets that we record for "Dining" come out exactly the same regardless of the approach. We're often in the situation that you describe, where we (or someone) uses a credit card for the whole bill and the others put in cash. We never find ourselves in the situation where someone owes money (and if we did it would be so rare as to not be worth extra effort/thought).

So what we do is record the entire charge in the credit card account as Dining. We record the cash in a Cash account, with a category of Dining, to make reporting and budgeting come out right. And then, a step that I don't think I saw anyone mention. We "withdraw" the cash from the Cash account, using a Category of "Entertainment" which is what we use for a catch-all. You might prefer to use a Category of "Miscellaneous" or "Pocket Money" or something like that. Or of course you might actually want to track how you spend the cash in more detail, but we find that to be unrealistic.

For company expenses I usually use a company credit card so it is easy to handle. But when that is not the case I use one of the approaches that has been mentioned by others (I've never tried to use Classes).

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I'm a long time Quicken user and participant here but I'd never thought of the approach for handling rebates due that Al mentioned. But I will in the future (although I try to avoid mail-in rebates altogether). I do keep scanned images of rebate stuff that I mail in and hadn't thought about storing them in Quicken either, but I think I'm going to give that a try.

Bernie

Perhaps the most straightforward method if you are interested in preserving transaction history -- something very vital for me as I am more interested in investements (for which I do not use Quicken, anyway :-)).

Back when I was using Managing Your Money, I would do exactly what is suggested above. MYM allowed transfers in and out of Budget Categories, just as in Accounts, and so you would simply assign the whole thing to dining and when, and if (!), you get reimbursed, you would simply transfer money out of the 'Dining' category to wherever the incoming money goes. It all works out the same, but you need not have a separate account. But, I do very much like and prefer the above suggestion as it does allow tracking of those pesky 'mail in rebates'!

But, even in MYM, I had to resort to a similar device to manage the Flexible Benefit Accounts, etc. where things first go from your pay and sit till you incur an expense and then you get reimbursed.

jg