Company Credit Card Dr. - Asset or Liability??? - The Book-keepers Forum (UK)

Catty · Member

Company Credit Card Dr. - Asset or Liability???

Rhianrach · Expert

I would say a credit card would be a current liability, however as they seem to owe you money wouldn't it go in as a current asset like cash would?

Catty · Member

Hi there Steve

My automatic response was to enter it under Current Assets. I'm now second guessing myself here...

Rhianrach · Expert

It's a hard one, I haven't come across it in my studies or at work so I wouldn't really know but I would be tempted if it was me to stick it in current assets.

Catty · Member

Thank you Steven,

Everybody I asked is all confused too hahaha. I have put this as an asset on my B/S and I also have a Bank Current Account which is a credit and have put that in liabilities.
I'm now struggling to get my B/S to balance.
This assignment is real tricky, as on TB provided they don't give Capital but only Ordinary Shares, which I need to use together with my P&L to balance my B/S - which doesnt balance!
I've tried moving the credit card balance to liabilty (or the current account to assets) which doesnt make much of a difference *sigh*

Rhianrach · Expert

Maybe you should post both the TB and the B/S that you have and I can have a look if you like.

Catty · Member

ah that would be great Steve!

Attached is what I have done so far.

ADAS · Guru

It seems unusual to have a debit balance on a credit card? Maybe there was a purchase that was refunded?

I should be shown under current assets, as it's a debtor i.e the credit card company owes the money back to the company who's BS you're drawing up.

Stardoe · Guru

Hi there,

I have had a quick look at your P & L and BS and if I am reading it correctly, you need to take another look at your depreciation. Remember that in the BS it is the total amount of depreciation that is taken off the cost of the fixed asset not just the depreciation for that year. And in the P & L it's just the depreciation for this year that is included. It's probably not the whole answer to your problem, but it may be a start

If the debit balance on the credit card is correct then I would also put this under current assets.

Pauline

-- Edited by Stardoe on Friday 29th of October 2010 08:58:46 PM

Rhianrach · Expert

Had a quick look and nothing leaps out to explain the difference between the financed by section and the B/S.

Might have another look tomorrow evileye

attilabenko · Guru

Hi,

Cr balance on a bank a/c is dr balance on your books so dr balance on credit card should be cr on your books (maybe)? all payments from bank a/c against cr card cr balance than cr bank dr credit card?

Catty · Member

Thank you so much for the suggestions.

Pauline I took another look at my B/S and as far as I can see I have calculated the NVB(net book value) of the fixed assets.
The P&L I've only entered the year's depreciation.
Is that what you meant or have I got it wrong?

Attila I have recorded the balances from Trial Balance accordingly. That is all Cr entries as Cr's and all Dr entries as Dr's. As you will see (on the attched file) I've put all the bank acc that are Dr on the Extended TB as Dr's on the B/S.

Thanks again Steve.

I reckon I've now spent three and a half days trying to figure out what on earth I've mispalce/done wrong/missed. Perhaps I'm just over analysing again???

Allison

Stardoe · Guru

Hi Catty, (Sorry....Allison

)

If I'm reading your extended TB correctly it looks like there was already some depreciation at the beginning of the year on Furniture and Fittings and Motor Vehicles? £93 on F & F and £2091.92 on MV? These need to be added to this year's depreciation figures for the BS, as depreciation is accumulative.

Also you have done the journal for depreciation and the total is £17698.67, yet in your P & L the figure is £18708.59?

You said there was no Capital, only Ordinary Shares. Are you sure you didn't need to work out the Capital at the beginning of the year beforehand? (Just a thought).

You need to be careful of your wording as well Depreciation Provision and Bad Debt Provision are credit balances and Depreciation and Bad Debts are debit balances. You have treated them perfectly correctly, but just check the wording.

Perhaps it would help if you were able to post the question itself?

Pauline

-- Edited by Stardoe on Saturday 30th of October 2010 05:10:19 PM