I am a new bookkeeper doing books for a new client that has not done any bookkeeping since she opened her business in April. This client received a business credit card and has it maxed out already. How is this entered into the business and what accounts do I use as it has to be paid off in payments?
Hello, thank you for your question. You will need to set up a credit card account in the chart of accounts.
Whenever an expense is charged through the credit card the expense account will be debited and the credit card account will be credited.
When you make payments towards the credit card you will credit the bank account and debit the credit card account.
You should also make sure to reconcile the credit card monthly just as you would do for the bank checking and savings accounts.