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How do I categorize these outside transactions?

Finnlee

I am using Quicken Classic Premier- Windows version. I regularly purchase items for my Inlaws and then they pay me back penny for penny with a check. All of these transactions are through my regular checking account, so this gets downloaded from my bank along with my personal transactions. This data is mixed in with my reports as extra amounts of spending and income and therefore I get erroneous reports. The amounts are significant, as I am remodeling their house, so the transactions are several thousands of dollars overall.

This will be ongoing for the foreseeable future. I would like to keep my data clean and separate, so I need an easy way to adjust my accounts for this on a monthly basis.

Any suggestions would be much appreciated and thank you in advance!

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bmciance

The real way to do this would be to set up a "receivable" (asset) account. When you spend money for them you categorize the amount using the reveivable account like: [Receivable from InLaws]. Then when they pay you back the check would be categorized to the same account. In the end it will all wash out in the receivable account and nothing would hit your expenses.

Finnlee

https://community.quicken.com/discussion/comment/20463376#Comment_20463376

Thank you for the quick reply! I do understand what you are saying, but I do not understand the step by step way to set this up. Once I create an asset account, I then go to my checking register, find a spending transaction, and upon edit, I change a spending category to the asset account? Do I put it in square brackets like you suggested? Is this a transfer?

Again, thank you for your help and patience!

bmciance

Yes, you put the asset account name in square brackets. Alternatively you can select "transfer" and pick the account from the list of accounts. Sorry, I am not by my computer or I would send a screenshot.

Finnlee

OK, this seems to work for all of the previous transactions so far. I'll see how I do for future transactions. Does having a negative or positive balance in the asset account affect any reports? It's not that important but sometimes the balance will be one or the other as I spend and receive their money.

Thank you so much for your excellent advice too!

bmciance

You're welcome. A balance in the account won't affect anything else. However, that said, you should aim for the account to be zero once you have been reimbursed. If you get paid exactly what you spend that should theoretically happen every time you get paid back. A non-zero balance could indicate that something didn't happen as expected, but not necessarily.

Good luck!

volvogirl

If it does show up in reports you can customize the report and unselect that account.

splasher

Another method would be to create a new category (income or expense, it doesn't matter) and use it for both the expenses and the reimbursements. The bottom line is that they cancel each other out and if you want, you can customize reports to not show the category.

Bmciance's method is the more "proper" accounting method of doing it, but using a single, unique category for the transactions is another way.