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Purchase Item with CC, Refunded with Cash

Jgatesway

I often run errands for my friend who owns a farm store near me. When I purchase something for him, I use my Credit Card and he reimburses me with cash. The first transaction was easy to record, but the cash is harder. Yes, I could go to the bank and deposit the cash and tie it all in a bow (net it out), but it would be nice to create a way of dealing with this.

I thought about creating a category called "lockbox" as we often put the cash he gives me in the gun safe in our bedroom. But, I just have not figured out if the Home Depot credit card transaction for $990 last week would just be filed under the category, "lockbox" - if that would work.

Thanks!

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NotACPA

Show the deposit of cash (or whatever you do with it) as using the same Category as that original purchase … that way they'll Net Out in your expense reports.

In a similar vein, I have an Account called "Receivables". I'd have used Receivables as the category for the original purchase and then Also used Receivables as the category for the cash receipt. Again, they net out. So, I mark both as Reconciled, and I filter the account to only show "Unreconciled" transactions.

By using an Account, rather than a category, it's easy to see if/who owes me.

Jgatesway

First off, thank you for the quick reply! Grateful~

So, I too have used a category called Reimburables as I have used Quicken for over 30 years and used that category for, well, reimburseables. But then came the check from my employer, or a friend whose check gets deposited - net zero. Easy peasy.

So, bear with me, I should create an account called "Reimbursables" - But the purchase for my friend was to Home Depot CC and in a month, I'll EFT the money to that CC to pay off that charge. I'm not seeing how the Account "Reimbursables" ties in.

Again, sorry to not have figured out what your suggesting…but I'm excited about having this solved~!!!

NotACPA

Record the initial charge in your credit card account with a transfer to Reimbursables. Record the cash received also using the Reimbursables account.

Paying your card bill has nothing to do with this transaction, which is presumably only 1 among many on the card. Reimbursables isn't involved in the card payment.

Jgatesway

OK, first create an asset account called Reimbursables. Then record the purchase in the CC account with the category "transfer to Reimbursables".

Now, with cash in hand, record in the Reimbursables account by using what category? This is exactly where I get stuck.

TIA.

John_in_NC

Don't overthink this. I do it all the time: I pick up some things for friends at the store (which I pay with a CC) and they pay me back in cash.

I personally have an account (not category) for my Wallet representing my cash in my wallet. (This also allows me to categorize cash purchases and track them.) You could do the same with an Account named Lockbox or Gun Safe.

I make the purchase, and I split the transaction with lines for my purchases and theirs. I use a simple category like Loan-it really doesn't matter. Pay the CC as usual.

When they pay you back, enter the $ received in your cash account ("Lockbox" or whatever), using a credit back to whatever category you used for the transaction in your CC transaction as NotACPA mentioned.

No transfers needed-I think attempting that would cause more confusion. The only point you would need a transfer is if you decide to take $ in your lockbox to deposit in the bank. Then that is a transfer which doesn't get categorized.

NotACPA

What are you doing with that cash? Depositing to a bank account … then it's a deposit.

Keeping it in your wallet, for that I have a "Cash in Hand" account, which I reconcile periodically since there's almost always "leakage" in this account.

bsantelli

This is exactly but I do and I've been doing for more years than I can remember. Anywhere that I have cash at rest, I have an account for. Example my wallet, my safe, or even the dollar bills I save in a can (although I still save change, with inflation now it's dollar bills Then once a year or so I take my coins and dollar bills to my bank for deposit.)

jacobs

I have one account I call "Exchange" which I use for any money I am owed. When I purchase tickets to an event for myself and friends, I record the purchase as a split between my entertainment category and a transfer to the Exchange account; when I get paid back, I enter it as a deposit in my bank account or my petty cash account, as a transfer to Exchange, which zeros out Exchange. If I pay a deposit for a future vacation, I may put it in Exchange until I pay for the vacation and use up the deposit. When I was working, I had a separate, similar account for work reimbursements, recording my expenditures and subsequent reimbursements to keep track of what I was owed and to make sure I did get reimbursed for everything.

Jgatesway

thank you all for those wonderful explanations!

it all clicked when you all said to make a new “account”. I’ve been trying to do with categories… Which obviously doesn’t work.

Jgatesway

John, why, when I enter an amount into the asset account I call Cash Lockbox, and the amount is shown as a credit (black negative)? This occurs whether I use a minus sign before the amount or not. I then go back and reenter the amount with a minus sign, hit enter, and the amount turns into a debit (green).

I have added 2 more columns that will hopefully make it clearer in the future. "Spend" & "Receive".

John_in_NC

I am glad that it "clicked". There is a reason that I suggested that you might be overthinking this. 😁

You can use the single Amount column or separate ones for cash in/outflows. It is up to you. I prefer the single amount column as it is cleaner and more modern (like how banks represent things). The ledger paper metaphor is a bit dated in my opinion-but each to his or her own.

Note: the single amount column will default to a "sign" of the category used-negative sign for expense categories, and + for income. You can enter the - or + before to override.

Your negative sign on an already negative amount is also why it overrode again and turned it positive (green)

You can use an asset account for this if you like, but you might consider it a cash account as you have liquid cash in hand. But, you might have a reason to keep it in a separate account group. It really doesn't matter in the end, though. Another personal preference.