The first step is to create an account for tracking the points. To learn how to add an account, please see the article linked below:
When creating this account, feel free to use an account number that works best for your setup. The account type should be set to either:
Revenue (preferred method)
Expense (this will display as a negative expense on financial statements)
Once the account has been created, there will be 2 entries required.
Entry 1: Record the Original Vendor Bill
The first entry is the actual bill from the vendor. To learn how to record a bill, please see the article linked below:
When recording the bill, take note of the following details, as they will need to match or offset on the second entry:
Date
Amount
Vendor
“Pay With” account
The Pay With account selected for this bill should be the credit card where the points were earned or redeemed (for example: American Express, Chase, Capital One, etc.).
An example of this entry is shown below:
Entry 2: Record the Offsetting Points Entry
The second entry is a negative expense recorded against the points account for the same amount as the original bill.
For example, if the original bill was recorded for $500, you would create a second entry for -$500 to the points account using:
The same date
The same vendor
The same “Pay With” account
An example of this entry is shown below:
Final Result
The end result will show 2 offsetting entries in the credit card reconciliation window, resulting in no net impact to the actual credit card balance.
The impact to the points account will depend on the account type selected:
If set to Revenue:
The negative expense increases the balance of the revenue account.If set to Expense:
The negative expense decreases the balance of the expense account.**Overall, the net effect of these purchase entries is neutral, meaning there is no impact to net income from the 2 transactions (the purchase) themselves.**
For a complete walkthrough of this process, please see the video linked below: