What is the proper way to record "bonus" money on a card. specifically, when I charge my transit pass for 100, I actually get 150 on the transit pass account. how do I record the extra 50?
You are paying for your transit it two steps: first, you transfer money from some source account to your card; second, you transfer money from your card to the transit authority. To account for the "bonus", treat it as a transfer from the transit authority to your card.
Asset:Bank account Asset:Transit card Expenses:Transit Add money to card -100 150 -50 Went to work -4 4 Came home from work -4 4 etc
By the time you deplete your card, everything balances out: $100 comes out of your bank account; $150 goes on to, then comes off, your transit card; and your total transit expenses are $100.
If you are looking to be more precise, record the extra $50 for what it is: additional government income:
Asset: Asset: Expenses: Income: Bank account Transit card Transit Govt travel enticement Add money to card -100 150 -50 Went to work -4 4 Came home from work -4 4 etc
You do not record the $50 at all.
The Transit Company is offering you a Trade Discount, which is a tactic to induce you to "Buy More". The original price of $150 is arbitrary. Think of it, if a product in the supermarket says Original: $5, now buy 2 get 1 free, do we really enter the free product $5 into accounting system? No.
The only time when you have to enter Discount is Cash Discount. It arises when you buy something on credit, and subsequently the seller gives you a discount only if you pay early. e.g the seller may say if paid within 30 days, 10% would be discounted on the statement.
For more information, you can look up IFRS 15.
For every $1 nominal value you spend on the Transit Pass during the day, you shall Debit Transport Expense and Credit Transit Pass by $0.66.
The simplest way is to treat the purchase the same way you treat buying groceries:
- Bank account (Asset)
- Grocery account (Expenses) - in this case, let's call it "Public Transportation"
Then enter the $100 in the bank account as a withdrawal, make a note in the Description field that you were credited $150, and select "Expenses:Public Transportation" as the Transfer account.
If you want to record $150 in the Public Transportation account, you'll need a third account to catch the extra $50. In your Bank account, enter a new transaction and select "Split" by either clicking the button or using the menu item "Actions | Split Transaction". Then enter these 3 splits in the same transaction:
- Transfer: "Assets:Current Assets:Bank Account", Amount $100 in the Withdrawal column
- Transfer: "Expenses:Public Transportation", Amount $150 in the Deposit column
- Transfer: third account (e.g. "Income:Gifts Received"), Amount $50 in the Withdrawal column.
Note: I'm not an accountant and this isn't financial advice. I'm not sure where the third account should really sit. You'll need to be careful how you treat it when tax-preparation time comes around.
I was given a solution so I am sharing here. By using one of the fake currency (there is a currency called "No Currency") I setup an exchange rate based on the "bonus" and it doesn't interfere with the real currency balance.