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How to Account for Rebates in Credit Card Statement

Introduction

There are times where you need to reflect a cash back credit on your credit card statement for office supplies, computer equipment purchases, etc. These are called rebates.

If you need to record refunds to your credit card, simply follow the “Add Transaction” step below, and associate it with the original Chart of Account.

Best Practice: Reconcile the Credit Card Statement using the reconciliation function in CosmoLex before recording rebate transaction in the credit card account.

Create a Chart of Account

You need to create a chart of account for Rebates. This COA is used to when adding rebate transactions to credit card statement and can then be shown in the General Ledger.

  • Go to Accounting > Chart of Accounts
  • Click Add.
  • In the Add Account window: Create an account number. You can use any account number in the 6400 range since this COA is going to be an expense. For example, 6460, 6461, or 6462. The account name should be called Rebates. Choose Expense as the account type.
  • Click Save.

You will now have created a Chart of Account for Rebates to be used when you need to account enter a rebate transaction in credit card statement.

Add Transaction

Next, Go to Accounting > Bank > choose credit card account > click details or double click on the bank under the Bank Tab.

  • Under Transaction Tab > Add.
  • In the Add Transaction Window, enter the amount, for type choose: “cc payment”, for the payor, enter your credit card institution name.
  • In the memo, enter “Rebate”. For Account* choose ‘Rebate’ which will be the one you created.
  • Click Save.
  • You will see a warning message: “You are allocating outgoing funds to an account which is normally used for incoming funds. Continue?” Click “Yes”.

Pay Balance on Credit Card

Create a Bank to Bank Transfer to pay your credit card balance. To learn more about this, read Pay My Credit Card Balance.

You have now successfully accounted for a rebate in your credit card statement.

Updated on July 11, 2018

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