In this instructional video, the host (Speaker A) and guest (Linda) walk through a common accounting issue that arises when a company uses a primary credit‑card account (e.g., Chase) with multiple employee sub‑cards. When a payment is made to the master account, the balance sheet can appear inflated because the sub‑account balances are not automatically reduced, leading to a misleading $24,000‑plus liability. The discussion presents two practical fixes: (1) posting a journal‑entry offset that zeroes out the parent balance, or (2) creating a $0 check that reallocates the master payment across each sub‑account. They demonstrate the $0‑check method step‑by‑step—duplicating the original payment, assigning portions of the total to each sub‑card (e.g., $831, $1,726.44, $28.31 credit), and adding a memo line to explain the adjustment. The speakers emphasize that this adjustment should be performed monthly after the credit‑card statement arrives, ensuring the balance sheet remains clean and accurately reflects each sub‑account’s liability. They also note that Chase statements often already break out individual card totals, which can be used to pre‑allocate payments and avoid the issue altogether. The overall goal is to maintain a tidy balance sheet and avoid the “PITA” of reconciling parent/sub‑card structures.
Chapters
Good morning, Linda. Happy Thursday to you.
Happy Thursday.
What do you have in store for us today?
Well, since I did yesterday's, it's your turn, so I'm gonna tag you off. This one, I'm actually not answering the top question, but you need it for clarity's purposes. Um, parent sub-credit card accounts, and I see this all the time. The person has a Chase credit card and they have multiple employee cards, and Chase keeps changing The way they do it, and they connected them and had to connect with the new connection system, all the credit cards, all the sub credit cards, and it's having— they're having a problem because they used to only have the parents. So if you go all the way up to the other end, the person that actually answered on the question was a little bit mad, said it was a PITA, and anyone figure out how to reconcile all the sub accounts? What's the new setup?
So what's a PITA?
It's bread.
Good answer. Good answer. So basically what we're going to be doing then is we are looking to resolve the good old, my balance sheet looks like junk because my credit cards are involved, right?
Yes, exactly. And I'm sure you've seen this too. Where it looks a little messy.
So what we're talking about here is when you condense the credit cards because you have a main account, then you've got your subaccounts, your balance shows correct as to what is on your actual credit card. But when you do the breakout, because when you paid it, you did the payment to the master account, but it still looks like apparently I'm the bad guy here with $24,000 outside and still owed. I'm glad to hear you're keeping yourself under control there, Linda. Thank you very much.
That's what happens when somebody has their fingers in the sample file.
Exactly.
Wait, you just moved into a new office. Didn't you buy a lot of stuff?
We call it startup expenses. To fix this one, what we're going to do is we're going to go in and first we should take a look at the check, the payment that we made inside the system. I'm going to just quickly duplicate my tab here so we can keep that there for us. Then coming up to the top— oops, it moved on me.
Boom.
So the challenge that we're having, or the reason it's doing this, is we are hitting the parent account, that Chase account, with the $17,421.13. But if we look at our balance sheet, we need to actually break that out with these different items.
Right, that would be the right way to do it.
Yeah. 2 ways to basically do it then. You could either do a journal entry making an adjustment where it's the offset so it zeros back out, or another way would be to create another, like, check, a $0 check. So we'll go boom, duplicate again.
Basically reshuffling everything. That's all you're doing.
Go boom, check, same date, of course. So we're gonna go Chase. $831. Here we're going to go Chase. We'll start with me with the biggest balance here. Total amount was $1,726.44. We'll go to Linda here next, the super shopper. Are you cutting coupons? Is that what you're doing, Linda?
No. I use your credit card.
Coco got us a credit, thank you, of $28.31. So now we've put these in, we've got that same $17,421.13, right? We're going to put this chase in here.
Against it.
Against it. And the purpose of doing that is it's going to zero that back out.
Right.
Check number.
And you might even want to put a memo line or something like that. You don't have to do that now, but you can put a memo line why you're making the zero check, you know, clean out the— because it can all be avoided by parceling out the pieces when you do make the payment. But because the payment's already in place, this is a better way to do it. It's a better way for us to show it because everybody in that long list of people complaining about Chase Already have the issue. If you pop back in on the balance sheet, should be the balance that it was.
Da da da da da da da.
Yeah.
Knowing is half the battle.
Mm-hmm.
So that basically brings it back in. It's doing it a. I really recommend you doing it every month. So you go in, you make that adjustment, zeros back out the different accounts. The reason to do it every month is you usually get that statement that shows you what the ending balance is on each one.
Mm-hmm.
So you probably have to calculate manually what, you know, payment amount went from the big large payment amount to each individual section of it. But you definitely want to do it each month, make sure it stays nice and structured. And it will help keep your balance sheet looking nice and clean.
Which is what the ultimate goal is.
Yep. Well, Linda, thank you for another good question and a good example here. Anything else to add to it today?
I don't think so. That was pretty much it. As long as they keep it going forward, breaking their payment out— and I think Chase actually breaks it out on the statement, at least it does on mine. So I think they actually put the totals for each person. So that's how you put the payment in when you enter it, and then you won't have the issue. But if you don't, you've got that nice little Zero check.
Awesome. Well, in that case, here's wishing you a very successful week.
