Credit Card Journal Entry

[khawerjavedqazi]

My question has two parts. The first one is a confirmity.

1.It is said that the credit card is issued by a bank through a credit card company.i.e the bank takes a credit from credit card company and give a loan in terms of that card.Bank is a debtor of credit card company and credit company is the creditor of the bank.
Tell me if my concept is correct?
If yes then

2.What a journal entry will the bank make? When we make a transaction with a credit card and when we give our credit card bill at the end of the month?

[Asif]

1. the Entry is correct, when ever there is an transaction, the credit card company becomes creditor and Bank - the debtor.

2.when we manke transaction,
Bank will debit the card holder,
and credit Credit card company

when Bank makes payment to Credit Card Company,
Bank will debit Credit Card company
credit cash/Bank.

subsequently when we pay,
bank will debit Cash/Bank
and credit card holder.

Muhammad Asif Masood

[christinecccc]

well said...


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