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PayPal and credit cards (duplicate transactions)

I made an online payment and wanted to pay via PayPal, but I didn't have enough $ in my PayPal account so I followed PayPal's process for linking it to a credit card, then paid through my credit card.

Now, in Quicken Mac after everything's been downloaded, I see BOTH transactions: -$650 on the PayPal ledger and -$650 on the credit card ledger.

What's the best way to handle this in Quicken? (Yes, I realize I can simply delete one of them, but I'm trying to understand how Quicken would prefer I handle transactions like this, and also, make sure this doesn't happen again. This particular one I caught, but what if I didn't notice a duplicate transaction?)

Answers

  • Tom YoungTom Young SuperUser ✭✭✭✭✭
    edited September 14
    The proper accounting for this situation is:
    1. Recognize the purchase/payment in the PayPal Account
    2. Recognize the charge to the credit card in the credit card Account, with the offset being to the PayPal Account, effectively zeroing out the Account with respect to the transaction.
    1)
    Debit Account or Category in which you want to recognize the cost    $XXX.XX
    Credit PayPal Account                                                                                   $XXX.XX
    2)
    Debit PayPal Account                                                                             $XXX.XX
    Credit Credit Card Account                                                                    $XXX.XX
    That will place the charge in the correct Account or Category, the liability will be shown in the credit card Account, and the PayPal Account will show that the activity went through it, but left the balance of the PayPal Account unchanged when all was said and done.
  • I really appreciate you taking the time to answer. Thank you.

    I don't quite understand what I should do -- I'm still a Quicken novice, unfortunately. Would you be able to provide a more detailed step-by-step, or a pointer to an article that gives me a step-by-step? Should I be creating manual transactions? If so, what type?
  • Tom YoungTom Young SuperUser ✭✭✭✭✭
    I'm not a Mac user so I can't give you a Mac-specific answer.  The accounting entries I've show above would be the entries I'd make in Windows Quicken, and have made in the past when I've used PayPal as the "funding source" for a purchase.  If I were making manual entries for these transactions they'd look something like this:
    The first entry recognizes the cost as a payable to PayPal and captures that cost in a Category called "Pest Control."  The second entry then moves the liability from PayPal to the credit card Account I have associated with my PayPal Account, as you can see here:
    If I wasn't making manual entries but relying entirely on downloads to alert me to entries that are needed, (which I'd guess is what you're doing),  then the first picture above would look different:
    because PayPal alerts you to the charge before the charge actually shows up on the credit card, but the accounting results are exactly the same
    What you need to understand is that every entry in every Account has an offset in another Account(s) or another Category(s).  So what you need to do is edit that first PayPal entry (again, assuming you're relying on downloads to make entries) to transfer the liability to the credit card.  Then make the entry to capture the rest of the accounting, i.e., the Account or Category you want to use for your purchase. 
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