How to Reconcile Credit Cards in QuickBooks Online & Desktop?

How to Reconcile Credit Cards in QuickBooks Online & Desktop?

Overview

To have effective bookkeeping accounts or statements requires knowing how to reconcile credit cards in QuickBooks Desktop and Online. The users have to ensure that the transactions recorded in QuickBooks correspond with their credit card paper statement when they complete credit card reconciliation.

In this blog, you will be guided by step-by-step instructions about how to reconcile the credit cards in QuickBooks online and desktop. However, let’s get to know the important aspects to remember about the credit card reconciliation QuickBooks process.

Is it necessary to Reconcile Credit Cards in QuickBooks?

There are multiple reasons as to why you would wish to include credit card payments in this particular software. Similarly, when you balance your checkbook, you need to review your accounts in QuickBooks to make sure they match your real-life bank and credit card statements. This process is called reconciling. It’s mandatory to reconcile your checking, savings, and credit card accounts every month.

• The chances of missing entries will be nil.
• During the reconciliation process, the possibility of finding the wrong entries can be found and also will be deleted.
• The duplication of entries will be removed seamlessly 
• The identification of incorrect balances will be highlighted.

How to Reconcile Credit Cards in QuickBooks Desktop?

You may use the banking option to reconcile credit cards in QuickBooks Desktop. This activates a menu that has a reconcile option. It allows you to add accounts and select your desired credit cards for them. The statement date is automatically filled in by the software. The remaining information can be added manually. Finally, you can check and verify the balance of the statement to complete the reconciliation. 

Let’s have a Quick Look on how to reconcile a credit card in QuickBooks Desktop

1. Open QuickBooks Desktop and go to the Banking menu.
2. Choose Reconcile.
3. In the Account field, select the credit card account you want to reconcile.
4. The Statement Date will be automatically filled in, but you can change it if needed to match your credit card statement.
5. Enter the Ending Balance from your credit card statement.
6. QuickBooks will display a list of transactions from your credit card account. Check off each transaction that appears on your credit card statement.
7. As you check off each transaction, QuickBooks will calculate a Cleared Balance and a Difference. The Difference should be zero once you’ve checked off all the transactions.
8. If you find any discrepancies or missing transactions, you can investigate and reconcile them by using the “Locate Discrepancies” feature in QuickBooks.
9. Once you’ve checked off all the transactions and the Difference is zero, click on the Reconcile Now button to complete the reconciliation process.

Please note that it’s important to ensure the accuracy of the transactions and balances before clicking the “Reconcile Now” button.

It’s time to see the detailed version of how to reconcile credit cards in Quickbooks desktop

STEP: 1 SELECT THE “RECONCILE” OPTION

There are two ways to approach the reconciliation option

Click Banking in the top menu bar of your QuickBooks Desktop dashboard, then pick the Reconcile option. 

(OR)

Another approach is to select the Reconcile icon from the Banking menu on the QuickBooks Desktop homepage.

STEP 2: ENTER THE INFORMATION RELATED TO CREDIT CARD STATEMENT

Once you have selected the Reconcile icon, a pop-up screen will appear, which will request information about your account statement as follows.

(i).  Account: Choose the credit card account that you want to reconcile.
(ii). Statement Date: Enter the ending date of the statement period.
(iii). Beginning Balance: The beginning balance is the ending balance from your last reconciliation. This will be generated automatically by QuickBooks Desktop.
(iv). Ending Balance: Enter the ending balance on your credit card statement.
(v). 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:

Once you have entered all the relevant information, go ahead and click the Continue button at the bottom of the screen.

STEP 3: TRANSACTIONS TO BE RECONCILED

A screen displaying the summary of the reconciliation will appear after you click Continue. The transactions listed are all the uncleared transactions from your credit card account register:

Examine your transactions and follow them from your books to your credit card statement and back again to your books to reconcile your account.

Link QuickBooks with your Credit Card statements:

Review and match every transaction in the QuickBooks Reconcile screen with your credit card statement. Click on the checkbox next to the transaction if every transaction matches your statement. As you put a checkmark on a transaction, you’ll notice that the cleared balance and difference on the lower right side of the screen adjust. Your ultimate goal is to make the difference as 0.

If you come across any transaction in QuickBooks that isn’t on your credit card statement, don’t delete it. Most likely, the transaction will appear on the statement for the next month. Any transactions left unchecked this month will automatically show up in the reconciliation for the next month. To find out if the entry in QuickBooks is incorrect, the charge must be looked into if it is more than a month old.

Link your Credit Card statements with QuickBooks:

If any of your transactions on your statement aren’t in QuickBooks but if the transaction is correct, then you need to add it 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.

Click Save & Close, and the transaction is added to the reconciliation screen.

STEP 4: BALANCE TO BE RECONCILED AS ZERO

When the difference between your statement of ending balance and cleared balance is zero, you will realize that you have reconciled your credit card balance successfully.

If you wanna make any amendments on the screen then there is a  Modify button, Which enables you to change the amounts that you have entered. Click Reconcile Now if all the information is accurate.

How to Reconcile Credit Cards in QuickBooks Online?

Now, let’s have a tour of how to reconcile credit card accounts in QuickBooks Online. So that you can ensure that the credit card activity in the platform matches your credit card statements.

A quick look at the steps of how to reconcile credit card accounts in QuickBooks Online:

1. Navigate to the “Reconcile” window by hovering your cursor over “Accounting” in the left menu bar and selecting “Reconcile”.

2. Select the credit card account you want to reconcile.

3. Fill out the Reconcile Statement window by entering the statement date and ending balance from your credit card statement.

4. On the Reconcile screen, mark each transaction that matches a transaction on your credit card statement as cleared by clicking the checkbox next to it.

5. If you come across a transaction that appears incorrect, you can correct it directly on the Reconcile screen.

Now we will guide you in detail

Step 1: Check your Opening Balance

If you are going to do credit card reconciliation in QuickBooks online for the first time, then you need to analyze your opening balance. From the moment you start entering financial transactions, it must correspond with your bank statement.  

Note: QuickBooks will pull transactions and enter your opening balance automatically when you link your bank and credit cards to online banking. 

Step 2: Select the Account and enter Your Statement Information

Choose the credit card account you want to reconcile, then input the balance at the end of the statement and the ending date as indicated on your credit card statement in the reconcile box. You must manually add any finance costs that appear on your credit card statement but are not to be seen in QuickBooks Online.

Select the Account: You will be able to initiate your reconciliation process by selecting the credit card account.

Beginning balance: The initial balance of the current statement must match the ending balance of the previous statement as shown by QuickBooks as reconciled. If this is the first credit card reconciliation, this sum will be 0.

Ending balance: In QuickBooks online you have to Input the ending balance as per your credit card statement. 

Ending date: Enter the last day of the statement period from your credit card statement.

Finance charge: If you haven’t previously, enter the financing charge from your credit card statement in a different transaction. To monitor the expenditure, specify the expense account or category along with the date the charge was assessed. The expenditure will be automatically recorded by QuickBooks when the reconciliation is finished.

After entering all your statement information, click the green Start reconciling button.

STEP:3 match the credit card statement with QuickBooks

The next step is to compare the transactions on the statement with those that have been recorded in QuickBooks. For everything to match, you must review each one separately to make sure that all dates and transactions are accurate in the program. 

What if the credit card transactions do not match with Quickbooks Online entries?

If you follow a few of the most common steps then the errors that will cause incorrect QuickBooks credit card transactions to appear can be rectified.

• Duplication of transactions: You can have unintentionally made a copy, which won’t appear on the statement while the original does. A new transaction could have been added rather than matched to an existing transaction, for example, if the credit card activity is imported from the bank. If so, the duplicate transaction ought to be removed.
• Error account: It’s possible that the questionable transaction was mistakenly reported on this account as a charge from a different credit card. If so, adjust the transaction and make sure the right account is assigned to it.
• Entry of the wrong date: If you enter the wrong statement date of any particular transaction, you may run into some issues during reconciliation. For instance, if the statement date is too early, some necessary transactions might be missing; and if it’s too late, some additional transactions might be included in your statement. Always ensure that the statement date you enter in QuickBooks matches your bank statement.

Take a closer look at any unmarked transactions on your statement.

You made a mark next to each transaction on your statement that QuickBooks displayed when you traced from QuickBooks to your statement. Look for any transactions without a mark on your statement now. Transactions that are not tagged must be uploaded to QuickBooks if they are valid. Once added, choose the radial button located in the rightmost column to mark the transaction as cleared.

A little tweet of Idea 

You can speed up the reconciliation process by having the reconciliation screen open in one tab while making the necessary modifications to transactions in another tab. This is an alternative and effective way to work on a single screen when doing reconciliation. To accomplish this, choose “duplicate” from the menu when you right-click on the reconciliation screen tab in your web browser to start a second tab. To view the revised screen when the changes are saved, you must reload the original tab.

Step 4: Confirm the Difference Is Zero

When every transaction you have chosen in QuickBooks corresponds with the transactions on your credit card statement, there should be no discrepancy between the cleared amount and the statement closing balance. If not, you may find some troubleshooting suggestions to assist you in finding inconsistencies in our article on  how to process bank reconciliation in QuickBooks Online

This sample reconciliation shows a credit card statement linked to every transaction. As you can see, there is no discrepancy, indicating that the cleared balance and statement ending balance match as well.

Click the Finish Now button which is at the upper-right corner of the screen once you are done with your reconciliation of the credit card statements or transactions.

Does QuickBooks benefit the reconciliation process when it comes to credit card statements?

Well!! The answer is yes and the reasons are listed as follows:

1. Accuracy: By reconciling your credit card transactions in QuickBooks, you can ensure that your records accurately reflect your actual credit card activity. This helps to prevent errors and discrepancies that could lead to financial penalties or audits.
2. Time savings: Reconciling credit card transactions manually can be time-consuming and prone to human error. By automating the process with QuickBooks, you can save valuable time and reduce the risk of errors.
3. Simplification: QuickBooks streamlines the reconciliation process by providing an easy-to-use interface that allows you to match transactions and reconcile your financial statements.
4. Financial insights: By reconciling your credit card accounts in QuickBooks, you gain visibility into your transactions, helping you to monitor your cash flow and make more informed financial decisions.
5. Improved cash management: By reconciling your credit card accounts regularly, you can keep track of your credit card balance, monitor your spending, and avoid costly late fees.

Overall, reconciling your credit card accounts in QuickBooks is an essential process that can help you maintain accurate financial records, save time, and improve your financial management practices.