Flummoxed about how to record transactions that involve multiple accounts/categories

cdeutsch

Hello, everyone. I'm a long-time (many decades) Quicken user, but I'm stumped on how to solve for a transaction recording problem. Hopefully someone has a suggestion, because while I fully understand debits and credits, Quicken's lack of Expense Accounts makes this problem a little hairier for me. Specifically:

I have a money market account (let's call it Remodel Account) that I use to fund remodel expenses; the account has debit card privileges. If I buy, for example, materials for the remodel, I enter the transaction and categorize its offset as "Remodel Materials."

- Remodel Account DR $1,000.
- Remodel Materials category CR $1,000

All well and good—very straightforward.

It can get a little more complicated, however. Let's say I use a personal credit card to buy materials, i.e., because I get points for using it (instead of the Remodel Account debit card). In this case, I would record the credit card charge normally, and the category would be the same—"Remodel Materials."

- Credit Card Account DR $1,000
- Remodel Materials category CR $1,000

However, now I need to "reimburse" myself, i.e., pay back those funds I put on my credit card from the Remodel Account. When I add a transaction to the Remodel Account register, payable to me, how do I properly categorize this transaction? I can't use "Remodel Materials"—as this was already used for the first transaction. Using it again would zero out the earlier entry, leaving the materials expense unaccounted for.

- Remodel Account DR $1,000
- ?

I can't use the credit card for the offsetting categorization simply because I'm not making a payment to the credit card. I would instead deposit it into my regular checking account, from which I would make a credit card payment later, when the bill is due.

Hopefully I'm making this clear and easy enough. But since Quicken doesn't have expense accounts like a regular GL accounting system would use, I'm driving myself crazy trying to figure out how to represent this correctly.

Again, thanks for any suggestions anyone might have.

I might be overnoodling this—maybe it's something patently simple. But I can't figure it out. Any help is really appreciated.

NotACPA

If there was no actual transaction on the Remodel card (it was on the other account) then you SHOULDN'T have a fictitious transaction on the Remodel account.  Otherwise, you won't be able to reconcile that account.

That you've recorded the transaction (using the other card) as "Remodel Materials" is sufficient to record the transaction WHEN you include that other account in your reports of Remodel costs.

Alternatively, since the Remodel account is a debit card, you can simply record a payment from the Remodel account to the other account.

Jon

I don't think you categorize it at all, I think you just log it as a transfer from one account to the other. If you write a check on your Remodel Account payable directly to the credit card company, it's just a transfer from the money market to the credit card. If you move the money from your remodel account to your checking account & later pay the credit card from checking, there are two transfers but neither one gets a category. Only the original purchase of materials is categorized.

volvogirl

Trying to follow this.  If you paid yourself back and actually took money out of the Remodel Account what did you do with it?  If you deposit it in your checking account then it is just a straight Transfer from Remodel account to the Checking Account.  Or transfer it to a Cash account.  You enter what actually happened in the real world.  

cdeutsch

> @RickO said:
> @cdeutsch  This question is posted in a QMac category but your profile says you're a QWin user. Before we spend time answering for the wrong platform, please confirm which operating system you use Quicken on.
>
> (BTW, I think this is easily solved using a transfer transaction)

I'm sorry for the late reply; I wasn't getting notifications that answers were posted. In this instance I'm using Quicken Home & Business for Windows. Apologies that I put it in the wrong forum. I use the Windows version because, several years back, I got sick and tired of Quicken's utter neglect of the Mac platform, and now it's just too difficult and unreliable to convert to Quicken for Mac.

cdeutsch

> @Jon said:
> I don't think you categorize it at all, I think you just log it as a transfer from one account to the other. If you write a check on your Remodel Account payable directly to the credit card company, it's just a transfer from the money market to the credit card. If you move the money from your remodel account to your checking account & later pay the credit card from checking, there are two transfers but neither one gets a category. Only the original purchase of materials is categorized.

This makes sense, particularly the latter example, because that's what happens most of the time. I pay for stuff from my personal credit card and then use remodel account money to pay myself back for it. so it seems the two transfers make the most sense. As an example, then.

1. Use personal credit card to buy materials for $2000. Credit card balance increases by $2000; category is Remodel Materials.

2. Pay myself back from the Remodel Account. Remodel account decreases by $2000 as a transfer to my personal checking.

3. Pay credit card from personal checking using another transfer: Checking account decreases by $2000; credit card balance decreases by $2000.

I think where I've been perennially stuck is that I've always thought every transaction requires an offsetting category, but your reply has made clear the value of transfers. One would think that in 30 years of using Quicken I'd have figured that out a long time ago, but...OK. I'm dense.

Thanks for the reply!

cdeutsch

> @volvogirl said:
> Trying to follow this.  If you paid yourself back and actually took money out of the Remodel Account what did you do with it?  If you deposit it in your checking account then it is just a straight Transfer from Remodel account to the Checking Account.  Or transfer it to a Cash account.  You enter what actually happened in the real world.  

That's evidently what I should have been doing all along. As I explained to Jon, above, I've been woefully undereducated in the value of transfers—this despite using Quicken for almost three decades. I feel like a bit of an idiot, but in my defense, as a former banker, my training was that EVERY transaction has an equal and offsetting transaction(s) such that debits and credits are in balance. However, since Quicken does not allow for expenses to be actual accounts, it cannot operate like a general ledger system. Therein perhaps lay my confusion all these years.

Thanks for your reply!