Definition of Credit Card Payments
We define a credit card payment as the amount a company remits to the credit card company for the purchases that occurred by using the credit card.
The company’s payment to the credit card company will result in a credit to the company’s Cash account. However, the debit portion of the payment entry depends on whether the individual credit card purchases had been previously recorded in the company’s general ledger accounts.
Example of Recording Credit Card Payments
Assuming that the credit card purchases had not been previously entered into the accounts, there will be many debits in order to record each of the many credit card purchases/transactions into the company’s appropriate general ledger account(s).
Assuming that the credit card purchases were recorded in the general ledger accounts prior to the company paying the credit card bill, the payment to the credit card company might be recorded with a credit to Cash and a single debit to Credit Card Payable (if that account was used when recording the credit card purchases).
