How Do I Make Adjusting Entry to Remove Old Credit Card Credit

datameister · ‎December 10, 2018

I am making accountant changes manually, and I have a question about the actual journal entry. This is to remove an old credit so that the credit card can be closed.

Acct Entry Details:

Action: Applied
Type: Journal Entry
Num: aje14
Name: Sears Credit Card 1234
Account: 2110 Accounts Payable
Memo: Applied to Credit Card Credit
Amount: 0.56

My question --- What would the journal entry look like? The "Applied to Credit Card Credit" throws me.

Thank you for your help!

datavet

qbteachmt · ‎December 10, 2018

You never use JE for this; you would be violating Cash Vs Accrual reporting.

Even worse, they offset credit card to AP? You never use JE for AP or Credit card, and using it between them is even worse, as that affects the reporting.

Let's stop making JE and fix this.

That existing JE would never be between CC and AP. Those are both Liability accounts, so they accomplished Nothing from the perspective of the P&L.

Increase the credit card account balance = Banking menu > Enter Credit Card Charge.

Decrease the credit card account balance = Banking menu > Enter Credit Card Charge, but change that at the top, the radio button, to a Credit.

Here is the problem with mixing AP into this: the CC account considers itself "paid" by any AP entry. Even if you never make a payment in Pay bills, or only partially, the CC account balance was been affected by that AP entry, already.

So, let's keep going: AP is affected by using Enter Bill (increases AP) and Enter Bill > change it at the top to a vendor Credit.

Now, it is time for you to Unwind this mess. Because making entries between these two is simply running your data in circles and not Resolving anything.

"The "Applied to Credit Card Credit" throws me."

It's just a memo, so who cares? It isn't Functional. They never "applied" anything. They Hid It elsewhere.

You didn't mention which is the debit and which is the credit, nor the date. You need to Figure this out, then Delete the JE after doing it using the Credit Card tools and/or the Vendor Bill tools.

And by the way, your accountant just revealed they have no idea how to use QB properly, by making that entry. It is bad enough when they use Bill and Credit Card together; using JE for both of these accounts is even worse.

View solution in original post

qbteachmt · ‎December 10, 2018

You never use JE for this; you would be violating Cash Vs Accrual reporting.

Even worse, they offset credit card to AP? You never use JE for AP or Credit card, and using it between them is even worse, as that affects the reporting.

Let's stop making JE and fix this.

That existing JE would never be between CC and AP. Those are both Liability accounts, so they accomplished Nothing from the perspective of the P&L.

Increase the credit card account balance = Banking menu > Enter Credit Card Charge.

Decrease the credit card account balance = Banking menu > Enter Credit Card Charge, but change that at the top, the radio button, to a Credit.

Here is the problem with mixing AP into this: the CC account considers itself "paid" by any AP entry. Even if you never make a payment in Pay bills, or only partially, the CC account balance was been affected by that AP entry, already.

So, let's keep going: AP is affected by using Enter Bill (increases AP) and Enter Bill > change it at the top to a vendor Credit.

Now, it is time for you to Unwind this mess. Because making entries between these two is simply running your data in circles and not Resolving anything.

"The "Applied to Credit Card Credit" throws me."

It's just a memo, so who cares? It isn't Functional. They never "applied" anything. They Hid It elsewhere.

You didn't mention which is the debit and which is the credit, nor the date. You need to Figure this out, then Delete the JE after doing it using the Credit Card tools and/or the Vendor Bill tools.

And by the way, your accountant just revealed they have no idea how to use QB properly, by making that entry. It is bad enough when they use Bill and Credit Card together; using JE for both of these accounts is even worse.

datameister · ‎December 10, 2018

qbteachmt, Thank you so much for your in-depth response. You do not know how much I appreciate it.

I erred in not including the date in my question. I wanted to include it in this comment, in case the date might make a difference in your response.

The date of the entry was 10/29/2015 - last tax year. I am just now making accountant's changes for last tax year. Does knowing the date change your response?

Thank you!

datameister · ‎December 10, 2018

qbteachmt, I got it sorted. Again, many, many thanks for your help!

qbteachmt · ‎December 10, 2018

Glad it helped; I found it to be a fun ride. As long as your entries to remove the JE and made the proper way, also are the right dates and accounts and change the accounts the same direction, you should be fine.

zharivera · ‎November 13, 2019

Im newbie in QBO, what or how is the entry of credit adjustment in credit account?

Charies_M · ‎November 13, 2019

Thanks for choosing QuickBooks, zharivera.

Would you mind telling me more about your concern? I'd appreciate any additional information to help us look for the right solution.

May I know what specific credit are you referring to? Is it a credit card account? Or are you trying to adjust credit from your customer?

For now, since you're new to QuickBooks Online (QBO), I'd like to share the following resources to be more familiar with the product's features and function:

I'll be around whenever you need help with QuickBooks. Have a good one.

lcrawford · ‎July 31, 2020

Hello,

I would like to know how to write off the remaining balance of a credit card. It was $1,000 and the credit card company accepted a settlement of $600. How do i write off the remaining $400?

GlinetteC · ‎July 31, 2020

Thanks for joining this thread, lcrawford.

Let me share some insights about clearing out your credit card balance in QuickBooks, Desktop. You'll want to create a journal entry to write off the balance. I would also recommend consulting with a professional accountant to help you clear out or handle the amount accordingly to avoid messing up your books.

Here's how to create a journal entry:

Click on Company.
Select Make General Journal Entries.
Fill in the necessary information.
Click Save and close.

That'll do it. You should be able to write off a credit card balance in QBDT.

Let me know if you have further questions and I'm here to help. Have a good one.

CarolTorre · ‎October 12, 2021

When you enter the Credit to Decrease the CC amount what category do you use to offset the amount?

Please advise, Thanks, Carol

CarolTorre · ‎October 12, 2021

Or do you Just enter a VENDOR Credit?

Candice C · ‎October 12, 2021

Good morning, @CarolTorre.

Thanks for chiming in on this thread. I hope your day is going well so far.

If you're unsure of the category to use when entering this, I recommend consulting with your accountant to be sure what's best for your business. They'll be able to give you the most accurate information.

Feel free to contact us again if you have any other questions or concerns. We're always here to lend a helping hand. Take care!

concreterepairs

When following you procedure, what do I choose as the account on the credit card credit page?

ZackE

Thanks for following up with the Community, concreterepairs.

If you're unsure of which account to use on transactions, I'd recommend working with an accounting professional.

If you're in need of one, there's an awesome tool on our website called Find a ProAdvisor. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.

Here's how it works:

Go to our Find a ProAdvisor page.
Use the City or ZIP search field to specify a location.
Select Find a ProAdvisor.
Browse through your results and find one that works best for the business. You can click on each ProAdvisor's profile to learn more information about them.

Once you've found an accountant, they can be contacted through their Send a message form:

Use the available text box to introduce yourself. Be sure to include details about which services you're looking for.
Enter your appropriate info in the Your name, Your email, and Your phone number (optional) fields.
Select Send message.

You'll also be able to find many detailed resources about using QuickBooks in our help article archives.

If there's any additional questions, I'm just a post away. Have a lovely Tuesday!

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