Balance Transfer Settlement: Posted as Cash Advance

Balance transfers are used to transfer a cardholder’s balance from another lender to a card account issued by your financial institution. CO-OP will collect the funds from the card issuer since balance transfers are drawn on CO-OP’s account with NCB. The description of the item will be: Bal Cons MM/DD.

BALCONDTL Report Sample:

TMGSETTRPT Report Sample:

Journal Entries:

Balance transfers report on the TMGSETTRPT on page 1, under the “Balance Transfer” column. This field is included in the “Debits” amount on page 2, which is part of the total daily cash settlement amount. Additionally, balance transfers are included in the “MRCH NET” column on page. Total merchant activity is aggregated, and the entire “Merchant Net Amount” on page 2 of the TMGSETTRPT is settled daily. Since convenience checks are both taken from the issuing financial institution (included in the debits total) and paid out to the issuing financial institution (Merchant Net Amount), CO-OP has to collect the funds one more time.

As the payout of the funds to CO-OP will be recorded through the daily card settlement journal entry, the journal entry for the collection of funds for balance transfers will need to be recorded.

1. Record the amount of balance transfer funds paid out through merchant activity.
    

   	Debit	Credit
   Cash	$2,200.00
   Merchant Activity Suspense		$2,200.00

   
    
2. Record the breakdown of merchant activity.
    

   	Debit	Credit
   Merchant Activity Suspense	$2,200.00
   Merchant Activity Suspense		$2,200.00

   
    
3. Record CO-OP collecting cash for balance transfers.
    

   	Debit	Credit
   Balance Transfer Suspense	$2,200.00
   Cash		$2,200.00

   
    

Balance Transfer Settlement - Posted as Sale

TMGSETTRPT Report Sample:

BALCONPMT Report Sample:

MD-028 Report Sample:

Journal Entries:

Balance transfers report on the TMGSETTRPT on page 3, under the “Sales Balance Transfers” column. Additionally, balance transfers are included in the “MRCH NET” column on page 1. Total merchant activity is aggregated, and the entire “Merchant Net Amount” on page 2 of the TMGSETTRPT is settled daily. CO-OP will collect the total amount of these balance transfers twice, once to reverse the amount paid out through merchant activity and the other to clear the sales balance transfer amount.

Journal entries to record:

1. Record card settlement (JE is simplified to highlight entry for the sales balance transfer item on the TMGSETTRPT page 3).
    

   	Debit	Credit
   Cardholder Loans Receivable	$7,920.00
   Balance Transfer Suspense		$7,920.00

   
    
2. Record the amount of convenience checks funds paid out through merchant activity.
    

   	Debit	Credit
   Cash	$9,070.00
   Merchant Activity Suspense		$9,070.00

   
    
3. Record the breakdown of merchant activity.
    

   Account	Debit	Credit
   Merchant Activity Suspense	$9,070.00
   Balance Transfer Suspense		$7,920.00
   Cash Advance Receivable		$7,920.00

   
    
4. Record CO-OP collecting cash for balance transfers.
    

   Account	Debit	Credit
   Balance Transfer Suspense	$7,920.00
   Cash		$7,920.00
   Balance Transfer Suspense	$7,920.00
   Cash		$7,920.00