How to record credit card processing fee properly?
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It involves three steps process.
Let’s say for example, customer invoice is $100 and credit card fee is $3, and net bank deposit is $97.
- Customer Invoice = $100 (it creates a/r as debit and credit to income a/c)
- Receive Payment = $100 (it relieves balance from a/r, moves it to undeposited funds)
- Bank Deposit = $97* (it relieves balance from undeposited funds to bank account)
Important split entry here:
Received From From Account ………….. Amount
Line 1 Jane Smith Undeposited Funds $100
Line 2 CC Fees* Merchant Service Fees (expense acct) -$3 (notice negative amt)
Deposit Subtotal as well as Deposit Total should show $97
* optional: setup “cc fees” as other type
Hope this helped.