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A
Allocator
January 3, 2024
Solved

Journal Entry for Cash Back Credit Card Rewards

  • January 3, 2024
  • 1 reply
  • 0 views

I'm not sure what the journal entry would be to account for cashback rewards at the end of a period that is being put towards the overall credit card payment.  In other words, It's time to pay the business credit card.  the balance is $2000.00 and we have accumulated $1000 in cash back rewards.  How do I record the $1000 and subsequent redemption.  Thank you in advance!!!! 

Best answer by Rainflurry

@Allocator 

 

If you prefer, you can record it to an expense account so that it doesn't show as a separate income line on your P&L.  Either way, your net income will increase by $1,000.  No way around that.      

1 reply

Rainflurry
Rainflurry
January 4, 2024

@Allocator 

 

Enter a credit card credit and assign an Other Income account to it.  That's the same as making a journal entry that debits your credit card liability account and credits the Other Income account.  You now have $1,000 credit that reduces your cc balance and a corresponding amount to Other Income.   

A
AllocatorAuthor
January 4, 2024

Wow!  Much appreciated.  Is there another way to do itm since now it will appear as income and impact taxes, net profit, etc.  

Rainflurry
RainflurryAnswer
January 4, 2024

@Allocator 

 

If you prefer, you can record it to an expense account so that it doesn't show as a separate income line on your P&L.  Either way, your net income will increase by $1,000.  No way around that.      

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