USA Paying for PPE with a credit card

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Hi,

I'm confused about paying for PPE with a credit card. For example:

When I buy $1K of PPE and pay with a credit card (a note), I record:
dr PPE $1K
cr Note payable (credit card payable) $1K

Then when I pay the credit card (the note) I record:
dr Note payable $1K
cr Cash $1K

The problem with the above transactions is that they never generate an investing cash flow. This can't be right! Does anyone know how to properly record these events so that the PPE purchase ultimately generates an investing cash flow?

Thanks!

Anthony Webster
 

Triest123

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Feb 12, 2012
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Hi,

I'm confused about paying for PPE with a credit card. For example:

When I buy $1K of PPE and pay with a credit card (a note), I record:
dr PPE $1K
cr Note payable (credit card payable) $1K

Then when I pay the credit card (the note) I record:
dr Note payable $1K
cr Cash $1K

The problem with the above transactions is that they never generate an investing cash flow. This can't be right! Does anyone know how to properly record these events so that the PPE purchase ultimately generates an investing cash flow?

Thanks!

Anthony Webster
=> As the PPE is paid by credit card, it is a financing activity.
(i.e. No cash impact on the investing activity)

When you repay the credit card by cash, there is a cash outflow on
financing activity
 
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credit card is normally considered accounts payable and as such, it will be part of operating activity.

If you took out a bank loan to purchase a large equipment. It will be considered financing activity.
 

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