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  • Writer's picturelancebwilkins

Purchasing With Credit Cards in QuickBooks

This QuickBooks capability is used by some but ignored by many others. Some are not sure how to use it. Others fear using it will be too time consuming and tedious. Let’s examine how the feature is designed to work, then look at some short cuts that might help some of you.

First, to use the credit card feature, you must have setup at least one credit card type of account on the chart of accounts.

See the screenshot below. Setting up an account as Credit Card type, like the CalOil Credit card highlighted, will tell QuickBooks to activate this feature.

If using the feature as designed, one would fill out a Credit Card Charge form, like the graphic above, for each credit card charge made. It fills out much like a bill or check form in QuickBooks.

When the statement from the credit card company comes, the account in QuickBooks can be reconciled just like a bank account.

Checking off the appropriate items, again like reconciling a bank account, will complete the process for the month. When the Reconcile Now button is selected, QuickBooks displays the following window.

This allows you to create a payment for the credit balance, or a lesser amount, at this time. That isn’t required though. One could cancel out of this window without affecting the reconciliation work just completed. If choosing this option, later, when a payment is entered for the card, be sure to post it to the credit card account rather than an expense account.

In this case, any check created to pay on this credit card balance would use CalOil Credit Card as the “expense” account on the stub portion of the check form in QuickBooks.

If maintaining a balance on the credit card, that is, the entire balance is not paid each month, this method is best. It helps keep the amount owed to the credit card company accurate in QuickBooks which keeps your reports accurate.

If, however, you need a streamlined process to track credit card expenditures, some people will use the following method successfully.

In this instance, the QuickBooks user will not enter any credit card charges until the monthly statement arrives. Then, they will consolidate the charges by expense account as shown in the screenshot above.

The amount shown on the Credit Card Charge screen should total the credit card charges made for the period on the statement sent by the credit card company.

This can then be easily reconciled with a couple of mouse clicks and the payment created in QuickBooks to pay the balance due.

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