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This is a line from a client's bank statement:

05/02/15 BAC 'AX*******4585, 101.00 1.92 99.08 ...etc

which means, that my client's customer paid £101 with an American Express card, AmEx received £1.92 in fees, and £99.08 went into the bank. I propose to do a journal entry as follows:

1200 Bank Current Account 99.08dr
4000 Sales Type A 101.00cr
7905 Credit Charges 1.92dr

Is that correct? The sale is T9, so no VAT issues involved. (How would it be resolved if there were?)

If this is a customer account then you should be doing an SR to receive the full amount from the customer.

Typically I would suggest you set up a bank account for the Amex 12xx, just as you might for a till or a credit card processor.

Post the transactions to the account and then transfer amounts as they happen.

So you might receive several Amex amounts during a day, have several fees deducted and then have a balance transferred to the main bank account.

The receipts could be SR or BRs depending on if they are account customers or not.

The fees are then deducted from the Amex bank account with a BP to the Amex fees expense account 790x

The balance paid to you by Amex is then a Bank Transfer from the Amex account to the main Bank account.

This keeps things neat as the Amex account balance will show the total amount "in transit" and enables you to enter transactions as they happen rather than waiting for them to appear on the bank account.

Sales are rarely T9 are you sure that is correct? Even if it is, it is unlikely to remain so for long and the businesess with have to register for VAT at some point.

If VAT was involved then under my method the BR would have the tax on it or the corresponding invoice to the SR would.

Thank you very much for that very comprehensive reply. i like the idea of the Amex fees expense account.

Also, you are right about the T9. It is in fact T0, as my client is a children's shoe retailer.

It's a strategy that works, not just with amex, but any payment processor.

I've got another AmEx query.

My Client's next statement has the following Amex line.
AX********098 BF , 46.00 0.87 28.32
The sale was for £46, the Amex fee was 87p, but my client only received £28.32 in his bank.

The obvious difference from a normal Amex sale is the letters 'BF' in there, which don't appear in other amex sales. Why have they deemed it correct to take £17.68 in fees???

I'd love to hear any reasons for this seeming outrage.

Thank you.

You need to speak to AMEX to find out why it doesn't add up/ seems they charged incredibly high fees.