In this tutorial Linda Artisani answers a QuickBooks Community question about reconciling a credit‑card account that has three sub‑accounts. She explains that the parent credit‑card account must be reconciled because the statement reflects the combined activity of all sub‑accounts, while each sub‑account receives its own transactions. She demonstrates how to record a credit‑card payment by creating a check (or expense) and allocating the amount to the appropriate sub‑accounts, ensuring the parent balance stays correct. She then shows how to clean up year‑end balances with a journal entry that offsets the individual sub‑account balances so the parent account shows the true ending balance and the sub‑accounts zero out, making the balance sheet presentable for CPAs or tax professionals. The video also notes practical considerations such as statement dates that may not align with the fiscal year and the need to match the parent‑account balance to the statement at year‑end.
Chapters
Hi there, Linda Artisani, Artisani Bookkeeping. I wanted to answer a short question on the community forum this week for my blog post. Bit of a busy week this week and mostly busy because it's the time of the year for an accounting firm. We're trying to get everybody's records so we can pass them along to the accounting professional. There's been a lot of back and forth with the, with the CPAs or the accounting professional, the EAs. So I wanted to just take a little bit of a break this week, do just questions like we used to do last year on the QuickBooks Community. So this question was from Sylvia. Reconciling a credit card with 3 subaccounts. All instructions say to reconcile the main/control account, which I would call the parent account, but each card still shows an open balance. How do I reconcile that? This is a wonderful question, especially this time of the year, because a lot of times you may ship the balance sheet off to the CPA and the CPA is looking and go, what is this? So let me take you to my account that has that in here. So credit card here, it'd be like, wait a minute, this card has a zero balance here, but you've got a positive balance here and a negative balance here. What is going on here? So you might find that if they're saying that, it's because you paid maybe the parent account, but you didn't break it out, your payments out by the subaccounts. So how you would do that if you were not— if say you just got your credit card and you've got the subaccounts, you've connected them all to QuickBooks. Like we have here on the banking. So you'll see, here's, you know, the credit card Linda, the credit card Matthew, credit card Sophie. So there's all the transactions are coming in separately of the parent account, right? They're not— the parent account is not pulling them in, but you're reconciling the parent account because all in all, when you get the statement, it's going to show the balance at the beginning balance, the ending balance, and all the transactions of all of 3 cards. So that would make the most sense to be able to do that reconciliation. So you have a couple of ways. So if you're going to do the payment, you want to do it right. I'm going to pretend that I'm going to pay Chase and I've got my statement in my hand. So I'm going to come over here and create the check to pay Chase. And I'm going to use the bank account. I use Casey's Checking. And I'm just going to pay Chase, the vendor. And I'm just going to come in here and pay Chase, not the parent account. I want to pay it by the subaccount. So I'll do like $82.53 with Sophie's. Chase. Linda, she's frugal with her money. So she only paid $17— $15, rather. Let's say we'll pay Matthew's. We'll just say that he spent the most money. Okay, so that's how I break it out. So now, if you looked at the credit card statement, it's going to break it out by each card, right? And it's going to give you a total. Sophie's card came to $82.53. Linda's card came to $15.74. Matthew's card came to $1,970.23. So you're going to pay that credit card by paying off the subaccounts because the transactions are being run in by the subaccount. And then you're going to reconcile the parent account. But this offset of the paying with the subcategories on the check is going to clear everything out and make it look beautiful. So that's how you would do the credit card payment. But what if you went on to your balance sheet? Or what if you handed your records over to the CPA or tax professional? And he's like, what is this at year end? And I'll just do year end for today. We'll just grab the balance at last year. So what if he says to you, I'm looking at this and what is this? This is, this is a mess, right? This is, you got a negative, you got a positive. So how would you rectify this to show just the balance at the end of the year? Well, you can do a journal entry to do that. Because all in all, the bottom line number is what it is, right? The total credit cards is, that's the balance, right? But for now, when you're looking at it in this way, it's going to be kind of— it's going to look weird on the balance sheet. So the easiest way is just to do a journal entry to offset these transactions. So you would come over to the plus sign, the Quick Create button. And actually, I'm going to right-click this so I can open this page in a new tab and keep this balance sheet open. I'm going to make the date on my journal entry 12/31. 18, because it's the year end. I'm going to come over here and just do Chase, the parent account, Chase, the Sophie account, Chase, the Linda account, and then Chase, the Matthew account. And then what I'm going to do is just grab these figures, right? So I know the parent account is zero, so I have to worry about that. But Sophie's at $112.34. She's got a positive balance. I'm going to do $112.34 here. And just right here, just to adjust credit card balance to actual— actual at year end or fiscal year end. So I'm going to come over to Linda over here. Oh, she's a zero. I don't have to worry about her. And then of course, come over to Matthew, $75,928.84. He's a negative, so $75,928.84. Wow. So now the difference, if we come over here, if I just grab— and this is a little trick if you don't want to do the math on a calculator. We don't have it. Let's see if we do Uncategorized. Just do Uncategorized Expense, and that gives me my number. So I'm just going to grab that, right-click, copy, right-click, paste it. I want to paste it to the right side. And then I'll just trashcan this line item. So my numbers now tie together, right? So they're together. And then of course I would copy and paste this down. If you did it right away in the beginning, it would just copy and paste it for you, especially here in the Plus version. But I'm just going to put it on all line items and hit Save. Now if I come back to this page with the credit card account, I am now going to reflect my balances on my credit cards, which actually the balance is— I was not counting it right. So that was counting all the credit cards for this one. It had a negative balance because Matthew had a negative balance. So he had a pretty large one. So this is actual balance, which is very unusual for a credit card. I doubt you'd have that unless you bought something for a lot of money and returned it the next month. But this now ties the parent account into the correct balance and all the other balances, all the other accounts are zero. So in most cases, they would have a positive balance, right? So you just got to make sure you offset your debits and credits with the balances that are on the credit card. Most of them would have obviously a positive balance, except for that top parent account that will be wrong, and then you'll be offsetting that. So I hope that helps. I hope that makes sense. It will make your records look better. That probably wasn't the best example because of the way it was, the balances that were on there. But hopefully that makes sense. If you can imagine when you look at the card, that's how you want it to look. So that just shows them one balance that it was at the year end, or whatever your balance was at year end. You might not even have— with the statement, you might find that the statement itself ends on like, you know, January 14th, and you have to reconcile through to January 14th. But you're going to need to go on that statement and look at that parent account balance and tie that into that balance. When you do year-end, you're gonna have to tie those balances to that balance that the parent account says at year-end. So the cycle of the, of the statement may not be the very end of the year, most likely not. So you need to make sure you do it that way too. So I hope that's helpful. If you have any questions, comments, feel free to reach out. Thanks. Bye. Bye.
