Question

It's the 20th July. You are keen to record the wheel aligner you paid for online with your private credit card. You will use a manual journal to record this asset purchase.

Tutorial: Add or edit a single manual journal.

Manual Journal:

1. Narration: Wheel aligner paid for by personal credit card
2. Date:20 July 2019
3. Tick Show journal on cash basis reports and Default narration to journal line description.
4. Auto Reversing N/A
5. Amounts are Tax Exclusive
6. Gross amount(incl GST) paid for aligner: $22,548.90
7. Two lines: 710 - Workshop Equipment, 881 - Owner A Funds Introduced
8. For marking purposes, please make sure your manual journal narration is: Wheel aligner paid for by personal credit card

What should be the debit amount and credit amount ?

Answer 1

According to the sum, we made credit purchase indicating payment on future basis, now there is a need to open a credit card account in our book of accounts.

Entry Particulars   Debit Credit

20th July 2019 Purchases ac Dr $22549.90

To Credit Card ac Cr $22549.90

(for the purpose of creating a credit account which would be a liability account , as purchase made on Private Credit card)

20th July 2019 Credit Card ac Dr $22549.90

To Bank ac Cr $22549.90

(credit card ac to bank ac as the liability is paid off through Bank persoanlized credit card)

Bank / Cash ac Dr xxxxxxx

Capital ac Cr xxxxxxx

(whenever the owner introduces money into the company credit the ac as owner and company are different according to Business entity concept also known as Separate entity concept)