Managing Credit Card Merchant Account in MoneyWorks

Software: MoneyWorks accounting software

In retail business, often you have different payment method such as Cheque, Cash, Credit Card, EFT (Electronic fund transfer) to allow customer to make payment to you.

When customers make payment to you via credit card, the amount of money you received from Credit Card Company will be less off the credit card surcharge (range between 1% to 4%).

Assuming you did a Cash Sales of $100.00 ($107.00 inclusive of 7% GST) and customer paid via a credit card.

To record this transaction, first, create a new Bank account type of account and name it as Credit Card (you may name it as VISA, MASTER or AMEX). In the Bank Setting tab of this account, select Credit Card from the dropdown list of the “Bank Account is” field.

Use the Receipt transaction in MoneyWorks to record the sale transaction and deposit the money you received into the Credit Card bank account, which you had created earlier.

The double entry for this transaction will be:

Debit Credit Card account (Balance Sheet account): 107.00

Credit Sales account (Profit and Loss account): 100.00

Credit GST Received account (Balance Sheet account): 7.00

When received the Statement from the Credit Card Company, you create a Payment transaction, pay out from your Credit Card bank account to the:

Cash at Bank account (Balance Sheet account): 103.79

Credit Card Surcharge account (Profit and Loss, expenses type of account): 3.21

(We assume the surcharge is at 3%, so 107 * 3% = 3.21)

The double entry for this transaction will be:

Debit Cash at Bank (Balance Sheet): 103.79

Debit Credit Card Surcharge account (Profit and Loss): 3.21

Credit Credit Card account (Balance Sheet): 107.00

Credit Card account will be zero off once the payment received from the Credit Card company. Hence, you may also do bank reconciliation to reconcile your credit card account.