Credit Card Rewards Account

[Jeremy Miller]

On Tue, Aug 3, 2010 at 21:15, Jay <jameyquinn at gmail.com> wrote:

> All,
>
> So, I've a fairly straightforward question... I have a credit card from
> which i
> get cash rewards. Every so often, they cut a check and i deposit the check
> into
> an asset account. The question, to keep with the 2x-Entry, how can i keep
> track
> of these xactions? 1) earning rewards (noted on a CC bill monthly) 2)
> redeeming
> rewards (asset deposit)
>
> I have a CC liability acct (L), a current asset acct (A), and a CC rewards
> sub
> (R) account (type asset) under the CC liability (L). I would prefer that
> these
> rewards not show in the (L) account because they screw with the balance.
> Any
> thoughts out there?
>
> You can move the rewards receivable account under Assets since it is
actually an asset.  You will also need some sort of income or equity account
to record the income earned.  Technically you could also count the rewards
as a negative expense (this is the standard US tax treatment - they are not
counted as income for individuals).

When monthly rewards accrued: debit rewards receivable, credit income (or
whichever equity-type account you prefer)
When reward check received: debit checking account, credit rewards
receivable

This way the rewards receivable account will always show the current balance
and the credit card account will show the balance due.

Jeremy