Credit Cards Accepted from Clients
Recording Credit Card Transactions
Would you please explain the process as to how credit cards accepted from a client would work between you and the card company?
1.Does each transaction at the time of purchase go directly to the card company?
2. Does the bank or card company at the end of each day tally up all the sales less their fee for the use of the card?
3. Does the card company electronically deposit that amount into your business bank account?
4. What source documents would you receive to support this deposit?
I am not clear what bookkeeping entries would be required to complete this type of transaction.
Would you make a bookkeeping entry for the sale to the customer and then another entry for the use of the credit card?
When doing bookkeeping, it is important to think your way through a transaction ... or series of transactions ... on paper using T accounts if necessary.
When it is a series of transaction, break it down into each step and book accordingly. Keep all your source documents to support the transaction, just like you would any other transaction.
For example: Step one
would be to record the sale to your customer
. In QuickBooks® you would use "Invoices" to setup your Accounts Receivable.Step two
would be to record the payment by the customer. In QuickBooks® you would use the "Receive Payment" function.
If the customer is paying by cash or cash equivalent at the time of the sale
, you would record a "Sales Receipt" transaction in QuickBooks®. In this case, the sale and the payment are recorded in one step.Tip: Anytime you don't know what journal entry QuickBooks® is booking "behind the scenes" when you enter data on one of their forms, the CTRL + Y shortcut key reports the transaction in the familiar debit and credit format.
The paperwork you receive from a credit card company depends on which company you are using and how the transaction takes place ... for example online PayPal reporting is different than merchant POS reporting.
How you book transactions also depends on volume. If you use POS, your system gives a daily report ... in which case you would book daily sales
as opposed to individual sales.Credit card processing fees
are similar to any banking service fee, so book accordingly.
I've posted this question under Unanswered Questions in the event that a visitor wants to respond with how their merchant account works.
In closing, I'd like to suggest you set aside 10-15 minutes a day enjoying a cup of tea and relaxing while you snoop and poke about this site to mine the tidbits of information it contains.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.QuickBooks® is a registered trademark of Intuit Inc.