 QuickBooks Online 2023 credit card reconciliation first month. Get ready to start moving on up with QuickBooks Online 2023. Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. Here we are in our bank feeds practice file. We started up in a prior presentation using the 30 day free trial. We also have open the free QuickBooks Online sample company. If you want the to open at the same time we suggest using the incognito window or another browser to open the sample company. You can open incognito by selecting the three dots in the browser if using Google Chrome and picking the incognito window and then typing into the search engine QuickBooks Online test drive. We're using the sample company to compare the accounting view the one the bank feeds practice file is in and the business view the one the sample company is currently in. You can toggle between the two views by going to the cog up top and switching the view down below. We're going to duplicate some tabs like we do every time putting reports in it. We're going to do it fairly fast because we do it every time right clicking the tab up top to duplicate it right clicking the tab up top to duplicate it. Going back to the middle tab that we first duplicated reports on the left hand side we're opening up then the balance sheet the big balance sheet. Note that if you're in the business view the reports are located in the business overview and then the reports on the left hand side. Back to the accounting view tab into the right we're looking reports on the left this time the profit and loss reports. I'm going to close the hand buggy I'm going to change the range 0 1 0 1 2 2 tap 12 3 1 2 2 tap running it to refresh in it and then tab in it to the middle in it and then reporting it. And then what am I doing no reporting it hold on that's not what I got carried away to close up the hamburger. Keep your head in the game keep your head in the game 0 1 0 1 2 2 tap 12 3 1 2 2 run it. That's the setup process we do every time let's open up the bank feeds because that's where our focus is tab into the left bank feeds are under the banking and the accounting view and there are the bank feeds tab up top. If you're in the business view by the way the bank feeds are located in the bookkeeping and then transactions up top and the bank transactions. Okay so we've been focusing in on the credit card we've got our two bank feeds set up the credit card and the checking account. We entered the information for the credit card so we might as well kind of finish it out round it out where we left off is this beginning balance issue. So when we entered the data from the credit card it looks much the same as the checking account except that when we pay for things with a credit card instead of decreasing the checking account we have an increase to the credit card account. And then we're going to pay off the credit card account with money that's transferred from the checking account. Now when we first put the credit card in place we have that same kind of issue if I go to the balance sheet as we do with the checking account. Meaning if I didn't just start the credit card from this point in time then I might have a beginning balance that's rolling forward from a prior period. And I just want to enter like that beginning balance I have to enter the beginning balance to be back in balance and then I can move forward from there. I would call that like the first kind of a bank reconciliation kind of situation will have a similar situation with the checking account with the first bank reconciliation. It's usually more complex or it could be with the checking account if you're using the bank feeds not if you're not constructing your books with the bank feeds especially if you're writing checks. For example it's likely that you're going to have outstanding checks and deposits that you might have to deal with on the checking account side. Whereas with the credit card people often don't even do the bank reconciliation in part because you're basically constructing your books from the bank or the financial institution with regards to the credit card. So for example if I go back on over to my flu chart remember that when we talked about the checking account we talked about the vendor side where at the end of the day cash usually goes down or credit card goes up. However we're paying for it for goods and services that we're purchasing and many small businesses whether they're using a credit card or whether they're using the bank can set this side of the system up not only on a cash based system but on one where they're reliant on the bank feeds. They pay for everything with an electronic transfer or with the credit card and that means utility bills phone bills you know whatever monthly supplies and then they wait till that clears the bank. And record it with the use of the bank with the information from the bank instead of recording it as the transaction happens and that works quite well with those kind of electronic transfers. Obviously if you're using a credit card then it works quite well the same way you're going to pay everything electronically. So you might just wait till it clears the financial institution and record the transactions from the financial institution credit card feeds bank feeds. But on the checking account on the customer side of things we saw that the deposits are not so easy sometimes depending on the industry because you might have to have a cash register situation where you can't just wait till something clears the bank or you might have to invoice which has an accrual component. On the vendor side as the business gets larger then you might have to enter accounts payable which kind of messes things up with regards to the bank feeds. But with the credit cards we don't have any deposit side really because all we're using the credit card for are the vendor cycle types of things for the payments and then we're going to pay off the credit card. Therefore many small businesses most will just use the bank feeds to record everything and that means the bank reconciliation is very easy like you could still do the bank reconciliation. But there's not going to be a difference between what's on your books and the credit card and what's on the financial institution statement at any given time. Because it's not like you're entering the data and then verifying it to the financial institution you're entering the data from the financial institution. So that means that you can kind of not even do the reconciliations in that case because if this balance ties out you should be good. I still recommend doing them because if this balance ever doesn't tie out then you're going to be like well what do I do now. Well the answer to that is you reconcile that's how you figure out what the difference is. So you could run into situations where you were somehow you got two transactions that were imported from the credit card. So you doubled up or you missed some transactions for whatever reasons possibly there was a shutdown on the bank feed data for whatever reason. You're going to have to figure that out. How do you figure that out. Well that's the bank reconciliation or credit card reconciliation. So if you're if you're reconciling everything is tying out you might as well do the reconciliation because it'll be really easy to do. And it'll give you that double verification and help you verify. And with this beginning balance issue it'll kind of demonstrate that beginning balance problem. So I'm going to imagine like this is our credit card statement which is I set up just like a bank statement right so it's going to have a beginning balance. Here's where the problem is we had a beginning balance that that we didn't put that on the book so that's going to be a difference. And then all we had for the first month I think was this one payment that was in place and no other charges. So this is going to be the activity. This is the ending balance. The point is the ending balance doesn't match what we have on our books as of this point in time. So I'm going to go back on over and say OK we've got to fix that I'm going to go to the reconcile just so we can kind of see that. Reconciliations are down on the accounting on the left hand side. You might have to check something off if it's the first time you've been in there to say I want to reconcile it might try to sell you on bank feeds or something. But we've already set them up so we're good to go. So then we want to go down to this one. And usually the default is that we're reconciling a cash account one of the cash accounts up top the bank accounts. But remember that we can reconcile in the same fashion the financial accounts the credit card credit card account. So that's where we're going to go credit card. By the way if you're in the business view the credit card reconciliation is going to be under the bookkeeping and reconcile experts and then reconcile. So there's where it is under that view just so you know. So I'm going to reconcile the credit card and then I'm going to resume and I already I already set up the beginning balances. If you if it's the first time going into it you'll have the screen that'll look similar to this screen which gives you the data that you can input. Now this is the problem. The beginning balance needs to tie out for this thing to work. It doesn't because we started the credit card balance in the middle after we had already been using it and had this outstanding balance. We're going to have to add that balance in order to reconcile. So I recognize that and then as long as all the payments that are the payments of the credit card and the charges tie out. If the beginning balance tied out then I should reconcile. So I'm going to say all right that's that's what we're going to do. The ending balance is going to be 52271. So hold on a second. It's going to be 52271. So let's say this is going to be 522.71 and then save that. So there we have it. We have our same reconciliation kind of screen that you might be used to with the bank feeds. Now this is the statement balance. That's what we basically tied in here. This is the cleared balance. This is what's in our system. The things that we have checked off. This is the difference. Once the difference is down to zero then we are we have reconciled. This isn't the reconciliation statement because this will create a statement bank reconciliation. But this will be the process of reconciling. Once this difference is zero we're good to complete the reconciling. So this number then how do I get that to match this number? Well the calculation is the beginning balance which is wrong because that doesn't tie out to the statement. So we're going to have to fix that because we should just basically mirror this thing up here. And then the charges which is we don't have any that ties out. And then the payments which are the one payment that was made from the checking account that pays it off brings us down to the 522.71. Now of course we're out of balance by a thousand dollars exactly because that's the beginning balance. Now notice that down here we've got the filters you can you can filter by cleared status transaction type payee date ranges. You can go from charges to payments to everything. And you've got some screen filters down here that you can play with to populate the screen a little bit differently give you some more space if you want. But with the credit cards normally you can just check everything off because everything that's in here should be on the credit card statement. And so what we're trying to do is tick and tie everything from the statement onto to the credit card what's in our books. So usually if it were a bank statement for example for example I would go every time from from what's on the statement the financial statement to the books. And if it's on the financial statement like this one the beginning balance but it's not on our books then we're going to have to add it to our books unless the financial institution is wrong. If it's on our books however and it's not on the financial statement on the on the bank statement or the credit card statement then if we were doing a full service accounting system that would that could be the result of simply a timing difference. Meaning I entered a check as of the end of the month the bank doesn't know about it yet so it didn't clear that would be a reconciling item. That would be reconciling the difference on our books to what's on the bank's books as being legitimate a legitimate difference due to the difference in understanding due to timing differences transactions that we know about but which the bank does not yet know about. However with the credit card that's not going to happen because most people are constructing their books from the bank information from the bank feeds which means no matter how many transactions I have in here I should be able to once the beginning balance is tied out just check this off and just check everything off and everything should tie out to what's over here. If it doesn't then I then I want to go through and take and tie everything off and see what happened. Was there a double entry that something get entered twice with something not entered or something like that then we got to figure it out but normally should be very easy to do if you constructed your books from the bank statement which is check it all off. Now we still have this beginning balance issue so I got to put this thing on the books somehow. I'm not so concerned with it being categorized as a beginning balance. I'm instead just going to categorize it over here so that I can just check it off down below and you'll see it'll do the same thing. So I'm not really that concerned with it not being over here on the left hand side. I just want to reconcile for the first time I can note that on my reconciliation report what that beginning balance is that I put it down here instead of up top and then I can move forward. So let's go ahead and I'm going to save this for later and I'm just going to say I've got to add that $1000. So the easiest way to do that is probably to hit the carrot over here and go to the accounting and the chart of accounts is what I'm looking for and go to the accounting and then the chart of accounts and if you're in the business view by the way the chart of accounts is under the bookkeeping and the chart of accounts and then we're going to go down to the credit card down to the credit card. There it is. I'm going to look at the register. I think that's the easiest way to enter it and open in the register and then I'm going to enter like an expense. It'll be like an expense charge type of thing. I'm going to enter as of the end of the month which was 083122. I think maybe the beginning of the month would be better. I should now note a couple of things to note. If this is a beginning balance and it was coming from a prior accounting system you don't want to put the beginning balance possibly on the income statement because it's something that you've already accounted for on the income statement. Therefore the other side you can record to equity or you can record it to like an expense account if you're doing it in the prior period meaning if I was starting my books in January 2022 then I might want to enter it as of December 2021 so that if there's any impact on the income statement it rolls into the balance sheet and I'm good to go but I'm just going to enter it directly into the equity accounts. I'm going to say 0808 let's say 0122 and I'm going to say that this is going to be a memo let's say beginning balance beginning balance it's going to be a charge of a thousand. I'm not going to put it to the income statement but just directly to the balance sheet account assuming it's from prior activity in a prior period so it shouldn't be on the income statement. So I'm looking for an equity account so if I go down it would be an equity. We could put it to opening balance but you don't ultimately want it in opening balance should be either you would think in owner's equity or in our investments or I'm going to put it into owner's equity. It's going to go into owner's equity and that's it so I'm going to say okay so boom let's take a look at what happens on the financial statements from that transaction running it, running and I'm scrolling down scrolling down scrolling down the visa account if I go into the visa did I take that the wrong way it's going to be owner's it's going to be the 1000 right here no because I'm so there it is and if I go into it it's an expense type of form that I use go into the credit card as opposed to the checking account scrolling back up top the other side I put into equity instead of the income statement I can't look at it because it won't drill down on it if you want to drill down on that number you could open right click and duplicate you can open a general ledger report so I can go down to reports and say general ledger general ledger I want to see the detail in that account and they won't let me click on it so I'm going to go to the general ledger and then from let's go from 010122 to 123122 run it and then I can say okay cash accounts receivable inventory blah blah payments equipment total here's the credit card and draws opening balance and owner's equity so there's the activity for owner's equity and there's our $1000 so for some reason that well it's not for some reason the reason you can't double click on it even though you can post to it it's because that's the account that income rolls into so for some so you would think you would still be able to click on it but you can't so you can see the detail here though by opening a general ledger report okay so back to the first tab let's go into our hamburger and then go down to the chart of accounts again or accounting and then go to the reconcile tab and let's resume the reconciliation resume and so now I've got the $1000 stop showing me these stupid things boom and now I've reconciled so now I'm in balance so we should tie out now so I'm going to say okay let's go ahead and and finish it so this is the process of reconciling now the reconciliation report will be very blah there's nothing to do reconcile this account how do you want to pay your bills so now it's asking there's an outstanding balance in the credit card so I could then pay the outstanding balance right now I don't want to pay the outstanding balance I'm going to pay it when I want to pay it so I'm not going to do it as I reconcile so I'm just going to say done and then if I want to go to my history on the right hand side it'll show us the reconciliation reports so this is for the for this account so if I view this report then again it's quite boring because the summary up top should give you this normally will reflect what's on the bank statement but we're missing that beginning $1000 because it's included down below so instead of having the 1000 up top it's right there but you can see it's the same thing you might note that in your first bank reconciliation but then this is the statement ending balance which in essence is this balance on the credit card statement and this is the register balance meaning this is what's on our register over here on the balance sheet let's run the balance sheet month by month so I can see the months broken out but let's just run it for let's go from 08 0122 to 11322 let's say boom and so now we've got August if I go down so there's the 52271 so as of 831 52271 and then there's the 52271 so the point is that there's nothing in between these two because we constructed our books from the bank account or from the financial institution so in other words if it was a normal bank statement kind of situation and we wrote checks the difference between those two might be the outstanding checks the checks that we wrote the checks that are in our system correctly but which have not cleared the bank therefore timing difference and we could have that you could if you were doing a full service system with the credit cards you would do the same thing I would enter the charges in our side when we bought something when I paid the utilities bill with the credit card I would enter the expense form go into the credit card when I actually make the charge and then verify it to the bank reconciliation to the bank fees but that's not what most people do because that takes another step most people because the timing difference is so short and because we're pretty we're pretty confident in transactions and whatnot we just wait till it clears the bank and then we record it from the bank feeds which means we're not going to have any timing difference because we waited till it cleared the bank which only takes a couple days generally so not a big wait not a big problem in order to record it okay so that's the credit cards and so next month it should be even easier so we might do one or two more months just to show that after this has reconciled after you're in balance then you almost don't even need to reconcile but again you might as well because it helps you to figure out if there is a problem how to solve the problem you solve it through doing the reconciliations and then we'll do the same thing on the checking accounts in future presentations with the reconciliations as well