What journal entry needs to be made to pay off a credit card

Accounting

• 
  Ashlee 1 year, 2 months ago

  What journal entry needs to be made to pay off a credit card

  Partner A added money into the savings account as it was payoff from a job…debited savings, credited Partner A’s equity.
  Now a portion of that money is going to pay off Partner B’s credit card bill that was used on the job. I need to debit the Partner B’s credit card, and credit the savings account for the transaction, but how do I reflect that Partner A’s equity is also being lowered?

  #152275 Reply
  1 Reply
  
  Crystalynn Shelton
  

  Moderator

  

  1 year, 2 months ago

  Hi Ashlee!

  So if I understood you correctly, Partner A was paid for a job and you increased his/her equity and the savings account accordingly which is correct. However, you also indicated that Partner B’s credit card was used on the job and a portion of the money that was received needs to go towards paying that credit card off. Where I’m confused is why would Partner A’s equity go down?

  As far as the 2nd transaction that you need to record, you should transfer the money out of the savings account to make the payment to the credit card company. That would be the following entry:

  Debit Credit Card Liability
  Credit Savings Account

  There is no need to decrease the equity for Partner A unless the original journal entry was an overpayment.

  I hope this helps.

  All the Best-
  Crystalynn Shelton

  #152279 Reply
  1 Reply
• Author
  Posts