USA Proper a/c for finance charges

[TribesTime]

When you get a finance charge on a vendor's bill do you post it to interest expense (typically just loan entries), bank service charges (typically just bank fees), or the expense a/c for the vendors normal invoices - e.g., janitorial, inventory, supplies (since I wouldn't incur the expense if not for needing that category item but a bill wasn't paid in time).

 

[TribesTime]

Oh, and opposite type scenario:
Get a invoice from vendor for $1K for early payoff of large invoice 6 months back.
Would you again, offset the inventory it represents, but that would throw off inventory valuation I think, so where else?

 

[bugtussellmom]

I would post it to interest since that is what finance charges are. If its a late payment fee charged by a credit card company, then I would call it a bank fee. Typically, since the late fee is not part of the cost, and you would not have to pay it if you weren't late, then I would not want to see it as part of the cost of an item. I hope that makes sense. It would be better to show it as an overhead cost, not part of cost of goods sold, in other words.