Welcome to our QuickBooks Desktop tutorial series! In this post, we’ll walk you through the step-by-step process of reconciling a credit card balance in QuickBooks Desktop. Credit card reconciliation is crucial to keep your financial transactions accurate and your company safe.
If you aren’t a QuickBooks Desktop user yet, you can choose from QuickBooks Desktop Pro, QuickBooks Desktop Premier, QuickBooks Enterprise, or QuickBooks Desktop Accountant. We compare QuickBooks Desktop products to help you decide which one is right for you.
The process of reconciling a credit card balance discussed in this video is based on QuickBooks Premier, but the process is the same with QuickBooks Pro. When you purchase Pro, one of our best small business accounting software, you will get a 33% discount on your first year.
Here’s a tutorial video of the credit card reconciliation process in QuickBooks Desktop Pro and Premier.
Why Reconcile Credit Card Accounts
You can’t expect banks and credit card processors to be 100% accurate all the time. Credit card reconciliation allows you to:
- Catch errors like incorrect amounts or duplicate charges
- Prevent fraud activities in your company
- Simplify tax time
To reconcile a credit card balance in QuickBooks Desktop, follow these steps.
- Launch the reconciliation screen
- Enter your statement information
- Reconcile your transactions
- Confirm $0 difference
- Write a check to pay now or enter a bill (optional)
1. Select Reconcile
Click on the Reconcile icon under the Banking menu of your QuickBooks Desktop homepage. You can also tap on the Banking menu on the top of the screen, then select the Reconcile drop-down:
2. Enter Your Credit Card Statement Information
After clicking on the Reconcile icon, a pop-up screen will appear, requesting information from your account statement, including the following:
- Account: Choose the credit card account that you want to reconcile.
- Statement Date: Enter the ending date of the statement period.
- Beginning Balance: The beginning balance is the ending balance from your last reconciliation. This will be automatically generated by QuickBooks Desktop.
- Ending Balance: Enter the ending balance on your credit card statement.
- Finance Charge: Input the finance charge, or interest, assessed on your credit card statement, including the date and the expense account you wish to charge. This will create a credit card transaction for interest expense, so if you’ve already entered the expense, leave this field blank:
After entering all information, click Continue.
3. Reconcile Your Transactions
After you click Continue, a screen showing the summary of the reconciliation will appear, as shown below. The transactions listed are all the uncleared transactions from your credit card account register:
Below is a sample credit card statement used to illustrate the reconciliation process in this tutorial. Take a moment to review the data in this sample statement as it will be used throughout the process.
To reconcile your account, review your transactions and trace them in both directions—from your books to your credit card statement, and from your credit card statement back to your books.
Trace From QuickBooks to Your Credit Card Statement
Review every transaction in the QuickBooks reconcile screen and match it to those on your credit card statement. For every transaction that matches your statement, click on the checkbox next to the transaction. As you put a checkmark on a transaction, you will notice that the cleared balance and difference on the lower right side of the screen adjust. Your goal is to make the difference $0:
If you see a transaction in QuickBooks that is not in your credit card statement, don’t delete it. It is most likely a transaction that will show up on next month’s statement. Any unmarked transactions this month will appear automatically in next month’s reconciliation. However, if the charge is more than a month old, then it needs to be investigated to see if the entry in QuickBooks is wrong.
In our sample credit card statement, you will notice that the transactions for Accounting Firm, Anderson’s Hardware, Vin’s Diner, and My Electronics Store, match the transactions in QuickBooks.
Trace From Credit Card Statement to QuickBooks
If there is a transaction on your statement that is not present in QuickBooks, but the transaction is correct, then you need to add it to QuickBooks. In our sample credit card statement, you will notice that the transaction for Postmaster for the amount of $173.24 is not recorded in QuickBooks. In this case, since it’s a legitimate transaction, it should be added to QuickBooks.
To create a new transaction, open the Enter Credit Card Charges screen from the Banking menu. Enter the correct information based on your credit card statement. If you need help with this step, check out our tutorial on how to enter credit card charges in QuickBooks Desktop:
Click Save & New, and the transaction is added to the reconciliation screen.
4. Confirm $0 Difference
You’ll know that you reconciled your credit card balance successfully when the difference between your statement ending balance and cleared balance is zero.
You will also notice on the screen that there is a Modify button, which allows you to change the amounts you entered in Step 1. If all information is correct, click Reconcile Now:
5. Write a Check to Pay Now or Enter a Bill (optional)
After you click Reconcile Now, a pop-up screen will appear asking whether you want to write a check for payment now or enter a bill to pay later. If you don’t want to execute either of the two actions, click Cancel, and you’re done. Otherwise, choose your option and click and OK.
- Write a check for payment now: Create a check for the entire credit card balance or a portion of it that you want to pay.
- Enter a bill for payment later: Enter a bill to pay the balance by the due date. This creates a bill that will appear in your unpaid bills screen to remind you to make the payment.
Congratulations on completing our lesson on how to reconcile a credit card account in QuickBooks Desktop. If you are considering a switch to QuickBooks Online, be sure to check out our tutorial on how to convert QuickBooks Desktop to QuickBooks Online.