How to Process Credit Card Transactions Within QuickBooks
As is typical with QuickBooks processes, there is more than one way to handle credit card charges. Users should assess the options and decide which option best suits their circumstances.
Option 1:
The most simplistic method is to make a monthly general journal entry – posting the total amount of the bill as a credit to a current liability account, called Credit Card Payable, and debiting the related expense, asset, or equity accounts. While simple – this method does not allow for pulling reports by vendor, or for reconciling the credit card statement.
Option 2:
A more detailed and recommended method allows for individual transaction posting to specific vendors, as well as statement reconciliation.
To setup the account – from the Home Page select “Chart of Accounts” / “New” / “Credit Card”. Once the account information is entered, just “Save and Close” and the credit card will be added to the list. Multiple credit cards may be set up in this manner to track transactions for different card/company/employee charges.
On the Home Page, there will be a new “Enter Credit Card Charges” icon located in the Banking section. When selected, charges and credits may be posted to specific credit cards by selecting the card at the top and entering the related information in the screen – much like entering bills or writing checks.
Once the transaction posting is complete, the statement needs to be reconciled by clicking on “Reconcile” within the Home Page and choosing the credit card from the “Account” field drop-down box.
Using Option 2 tracks expenses, retains vendor information that can be viewed within “Vendors & Payables” reports, preserves transaction dates, and allows detailed descriptions within the transaction.
For more QuickBooks assistance or information please contact one of the KTLLP QuickBooks ProAdvisors.