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Level 1

How to Classify Credit Card Payments

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.

8 Comments
Level 1

First Q2. The balance of the card from 2013 should be ent...

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?

Level 1

Q1. They are being imported automatically. So it appears...

Q1. They are being imported automatically. So it appears 3 times
(a) on the credit card acct, when the purchase was made
(b) on the credit card acct, when the payment from the bank account was made (let's say same amount as purchase)
(c) on the bank account, when the payment from the bank account was made

Q2. I want to record that as an expense, or COGS.

Thanks.
Level 1

On the Bank Account...code the payment to the credit card...

On the Bank Account...code the payment to the credit card account. On the CC account, code the payment to expense account if you are not tracking as inventory. Now, for the payment that shows on the CC account....if you post the bank one first...it may say that it finds a match, if so then confirm the match. If it does NOT say that it found a match, then you have to exclude that entry by clicking on the exclude button or else the payment will be counted twice. You already recorded it in the Bank download so you do not want to record it twice.

The 2013 entries are not an expense for 2014, so that is why you post to equity account.  I thought you said you just started this file for 2014.
Level 1

Thanks. Yes, I did start it for 2014. But I have expenses...

Thanks. Yes, I did start it for 2014. But I have expenses made at the end of 2013 with the credit card that were made with the intention of paying them in 2014 and entering them in 2014 because I didn't want to start accounting for a few days and a couple of purchases made in 2013.
Thanks again!
Level 2

Re: How to Classify Credit Card Payments

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.

Highlighted
Level 2

Re: Q1. They are being imported automatically. So it appears...

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.

Level 1

Re: How to Classify Credit Card Payments

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  ?

thanks

QuickBooks Team

Re: How to Classify Credit Card Payments

Hello there, @kimberly.

 

You can split your payment from the For Review tab in QuickBooks. Let me show you how to do it.

 

Here's how:

  1. From the left menu, click Banking.
  2. Under For Review tab.
  3. Locate the payment you want to split.
  4. Select Split, then fill in the information.
  5. Click Save and add, once done.

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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.

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