We are increasingly paying invoices by credit card however I would still like to be able to track these purchases through AP. I searched the forum and found this topic discussed on 5/13/09. I have done the following and just want to confirm that my thought process is correct:

I created a new GL account called 'Due to American Express'.
I created a new control account in AP and used the new GL account as the payable control.
I created a new bank account in AP and used the new GL account as the Bank acct.

I am using the new control account for any vendor that will be paid by credit card, so that when I record an invoice the expense w/b debited and the Due to Amex w/b credited.

When I go to charge the invoice I will process a check run for the Amex control account. This will in turn debit & credit the same account, creating a zero dollar transaction (as it s/b as I am simply charging the invoice)

When the Amex bill comes in, I will still need to record the purchases as well as the pmt. I normally do this through a GL entry due to the fact that the large number of distributions normally hangs up in AP AND we pay the Amex bill online.

Am I missing anything? Am I correct that the new 'Due to Amex' GL account is really set up for the purpose of the control account; nothing will ever really go through that account in the GL.

And of course is there a better way of accomplishing what I'd like to do?

Thanks

Hi Lulu

Your way is not correct.

Do not set up a control account set for this, you only need a new bank. Nowhere in that thread are control accounts discussed. The new "Due to Amex" GL account is a REAL control account - the balance in that account is what you actually owe Amex. This would be especially true if you did not pay off the credit card in full each month.

Please read that thread more carefully. If you are still unsure and would like advice, email me at steve@sschwartzcpa.com. I'm sorry, but this will have to be billable.

Steve Schwartz

We simply created a phantom bank called AMEX. Where a real bank would point to a bank GL account, this phantom bank points to an account called AP-AMEX. Everything paid by AMEX is paid through this phantom bank. This records everything correctly (debits the appropriate payables account, credits AP-AMEX.) At the end of the month we pay the amount that is in the AP-AMEX account to AMEX using our "real" bank.

Works well for us.

Exactly, Brian.