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Articles:

Credit Card Transactions

Entering Fixed Assets as Journal Entries

Estimating

Estimating-At-A-Glance

Estimating, Project Management Overview

Paying Liabilities and Transfers Between Accounts

Payroll Overview

Profitability

Proposals

Profits - Strategies to Improve

Responsibility As A Motivator

Risk Management

Schedule Variance

Take Your Business to the Next Level

Teamwork As A Motivator

Time Management

Time Management Matrix

Timetable of Procedures

The Balance Sheet, Part 1

The Balance Sheet, Part 2

The Balance Sheet, Part 3

The Balance Sheet, Part 4

Training Saves Money

Value As A Motivator

Year-end Close

Credit Card Transactions in Master Builder

The best way I have found to create credit card transactions in Master Builder is to use a journal entry (in screen 1-3) for each actual transaction. In other words, each time someone pays for any item with a credit card, you enter a journal entry.

The entry is a Credit to a Credit Card account you would set up in the Current Liability range of accounts, and a Debit to an expense account of some type.

First (in screen 1-7) set up an account for each credit card being used by your company. Often it’s easiest to name the account with the last 4 digits of the credit card at the end of the name (e.g. Citi Mastercard 1234, B. of A. Visa 9876).

To enter a credit card transaction in screen 1-3 Journal Transactions:

1. Enter a transaction number in the Trans # field. It could be an actual invoice number, the date-dash-number or any meaningful system you might devise.
2. Enter the date of the transaction. Use the actual date so it will appear to close to the date of the entry on the credit card statement.
3. Enter a short description of the purchase. You may want to build a Quick List using the blue down arrow next to this field.
4. Enter a Vendor. It is the vendor which was paid by the credit card, not the credit card company.
5. Either enter a new description in the grid, or let the description from the Description field above populate the first cell.
6. Enter the credit card account.
7. In the Credit Amount column, enter the amount of the transaction.
8. Enter one or more lines for the expense(s): Description and Account (Direct Expense, Shop Expense, Overhead Expense or Admin Expense). If there you want to use more than one line, you may do this as long as the total debits equal the credit at the bottom of the screen.
9. Enter the Amount(s) for the line(s) in the Debit Amount cell(s).
10. Make sure the Period is correct for that date, and Save.

If you use this system, the result will be that when you receive your credit card statement, the entries on it should match the entries on the General Ledger report for that credit card account. Also, the expenses will have been correctly expensed on an item by item basis.

When you receive your credit card statement, print the General Ledger for the credit card account at screen 2-4. You may need to print more than one period (e.g. Period 3 through 4) because the GL period may overlap the credit card statement period.

Check off each entry against each other on both sets of paper. You may find that you were not informed of all credit card transactions, and some research may be necessary.

If there are finance charges on the credit card statement, enter the finance charges using a journal entry as outline above (credit the credit card account, debit a Credit Card Charges account or Bank Charges account in the overhead range. You might need to set up a new account for this in screen 1-7, or you may want to use multiple finance charge accounts to determine which card is using the most money in fees.

To Pay the Credit Card Bill:

In screen 1-1, write a check to the credit card company, using the Credit Card account in the Debit Amount column. When you get the next statement, it should be easy to match the payment up to the one displaying on the statement. The finance charges should display correctly, and MB should balance to the credit card statement.

Once you start using this system, after a month or two, it will become logical and easy. The only drawback may be if your company generates a high number of credit card transactions.

Another reason to use this method, is that the actual transactions are shown as liabilities, which is correct accounting: you are essentially taking a small loan from the credit card company every time you create a transaction.

The actual credit card transactions themselves do not require an Accounts Payable Invoice, because you are essentially treating these transactions as cash: they are charged (the money is spent) immediately. The only exception is if you are paying subcontractors with credit cards – you do want to run subcontractor payments through AP for more than one reason. But it may not be such a good practice to pay subs with credit cards anyway.

Please contact me if you would like to learn more about instituting a comprehensive training process. Thank you.

Andy King
T: 805-771-8400
service@missiondevelopment.com