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Credit card balances are autopaid by bank account and were never applied against cc expenses - how to fix?

Hi - I could really use some help... Long story short, I hired a bookkeeper who didn't have the expertise I thought she did and now I'm trying to clean things up... I'm a beginner QB user so please excuse if there is an obvious answer to this Q - thanks in advance for the help!!

 

Our business credit card balances (4 cards in total, under one cc biz account - each card comes in a different monthly statement) are auto paid by our business checking account each month.  All credit card expenses are correctly recorded to the right accounts and my bank register reflects correct checking account balances, etc... however, my balance sheet shows that none of the auto payments have posted or been directed against the credit card expenses... I also have both negatives and positive numbers listed under my credit card liabilities on my balance sheet?  Unfortunately, because of some changes that were made by the bookkeeper that I don't quite understand, I have two years of stacked cc liabilities that have never had the balance payments applied to them.  Any guidance or advice would be very much appreciated... thanks!!  (Using QB 2018 Premier)

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Established Community Backer ***

Re: Credit card balances are autopaid by bank account and were never applied against cc expenses - how to fix?

The process is:

Credit Card Purchases are the Expense entry. Every date of purchase increases the running balance you owe the card provider.

 

You get a Statement and use that to reconcile the account.

 

There is no Bill.

 

Your checking account payment lists one (or more) allocated amounts to each credit card account, which shows the balance going down. It is a debt payment.

 

"I have two years of stacked cc liabilities that have never had the balance payments applied to them"

 

It is likely the expenses were double-entered, then. Once on the Credit Card Charge entry and then summarized in the Checks. That means prior year tax reporting is wrong.

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Re: Credit card balances are autopaid by bank account and were never applied against cc expenses - how to fix?

OK, thanks for your response, I appreciate the help.  Do you have a link (or a reference you suggest) that instructs one on how you go about correcting expenses that were double entered?  

QuickBooks Team

Re: Credit card balances are autopaid by bank account and were never applied against cc expenses ...

Thanks for getting back, ViM3.


I’m here to help you correct the double-entered expenses in QuickBooks Desktop.


There are two ways on how you can remove the amount. You can either create a General Journal Entry, or use Discounts to write off the small amounts. Make sure to consult your accountant or tax expert prior to doing this to ensure accuracy with your books.


To create a General Journal Entry:

  1. From the Company menu, select Make General Journal Entries.
  2. In the Make General Journal Entries window, change the date and fill in the entry number
  3. For vendor with overpayment; choose the Account field and select Accounts Payable from the drop down list.
  4. Enter the amount under Credit column; pick the vendor name in the Name column.
  5. In the next line, select the offset account and enter the amount under Debit column
  6. For vendor with underpayment; choose the Account field and select Accounts Payable from the drop down list.
  7. Enter the amount under Debit column; pick the vendor name in the Name column.
  8. In the next line, select the Offset account and enter the amount under Credit column.
  9. Select Save & Close.

To apply the journal entry to the existing debit/credit:

  1. From the Vendors menu, choose Pay Bills.
  2. Select the bill and pick Set Credits.
  3. Under Credits tab, choose the available credit and pick Done.
  4. Click Save & Close.

If you opt to use the Option 2, you can check out the article below:


Write off customer and vendor balances


That’s it! You should now be able to correct those transactions and get back to business.


Feel free to let me know if you have other questions with the process. I’ll be around.

Established Community Backer ***

Re: Credit card balances are autopaid by bank account and were never applied against cc expenses ...

VivienJ, I would like to help you learn more about how Desktop QB is used to manage credit cards.

 

First, you don't use JE in QB desktop when Names are involved. They bypass Cash vs Accrual Basis reporting, for one thing. They do not provide for listing Items. They are not used for AP, AR, inventory, QB Payroll, QB sales, sales taxes.

 

Next, Credit Cards are not part of Bills and AP management. You are confusing two different types of liability. AP is not reported on cash basis, but credit card is part of Cash Basis purchase reporting.

 

So, there is no Bill. You get a Statement. It is used to reconcile that account; there is no Bill. This is debt; every time you use the card, you took a micro-loan from that card provider.

 

CC activity is found from Banking menu > Enter Credit Card Charge. If you need to enter the reversal of a charge, that is seen at the top = the radio button for Credit/Refund/Return.

 

And the payments from checking against the card balance are simply a "transfer" between the two balance sheet accounts. Or, on a Check, on the expenses tab, you list the CC account. Or, from the other perspective, Enter Credit Card Charge, change to a credit, and here on the expenses tab, list the checking account used to make that payment.

 

I hope that helps clarify nothing about the CC is AP or JE.

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