Just got started with QBO. I have 1 credit card account and 1 bank account.
I purchase ingredients and other supplies and services with the credit card. Then I pay the credit card with my bank account. Now, the purchase itself that was made with the credit card, I classify it as COGS, or expenses, whatever it is.
But then when I make a payment, 2 new transactions appear in QBO. One, the credit to the card account, and one, the debit from the bank.
Question 1: How do I classify both of those transactions?
Question 2: I have a few transactions in the credit card that are from 2013, that are not in QBO, but that I'm paying now with the bank account, so in this case, I "ONLY" have the 2 transactions of the payment, not the original charge to the card. How do I classify those 2 to accurately keep my records.
Thanks in advance.
First Q2. The balance of the card from 2013 should be entered in QBO. Click the plus sign at top of screen, then "show more". Select Journal Entry. Date is 12/31/13 and you Debit an Equity account and Credit the Credit Card account for the amount of the old charges.
Q1. How are you entering? Are the credit card account and bank account downloading into QBO and you post from there or do you enter the charge and payment when they happen?
For me I found I spent too much time downloading each card transaction so I ended up making one entry / check from my checking account with my statement.
Assuming you pay off the entire bill, I write one check for the entire payment but use the splits to separate the payment into accounts- automobile expense, office supply, professional relations, dues and subscriptions etc.
everything balances and all expenses or cost of goods sold get accounted for as well as the money out of the checking account. I save my statement if I need to check a specific charge later.
I found it difficult if I wasn’t consistent with the download and it became very hard to sort out if you have 20/30+ transactions a month.
Think of it as only one transaction of the purchase (ingredients etc) the other is a payment from the bank needs to ‘pay’ off the purchase (credit card) so that payment becomes a transfer if I understand correctly. That should eliminate triple entries.
Either way should solve it.
Thanks! That is the info we are looking for- so... when I record the payment in my bank statement- how do I use the splits to itemize each purchase ?
Hello there, @kimberly.
You can split your payment from the For Review tab in QuickBooks. Let me show you how to do it.
Also, you can always visit our Banking and bank feeds for QuickBooks Online to learn and read some related articles that can help guide you in your future tasks.
Feel free to leave your comments below if you have other questions. I'm always here to help.