Credit Card Transactions Reporting and Expenses

I have created and have been using the following accounts

- Cash
- Credit Card
- Bank Account

Let's say I order some food via a mobile app and pay using the credit card. Then, I'd add that payment as a "Charge" to that account. Then, If I checked the "Spending", that amount would be included under the "Food & Dining" category. So, whenever I check it, I know how much I have spent on food for a particular time period. Now, Let's assume the total for that category is "10000" including my latest credit card transaction.

Later, When I made a payment to the "Credit Card", what I'd do is deduct the amount from the "Cash" or "Bank Account" and add it as a payment to the "Credit Card" account. This is where it gets tricky and confusing for me. Let's say the payment is 5000. Now, If I checked the "Food & Dining" category in the "Spending", it would be "5000" after deducting that card payment. Now, what I see is that the money I've spent for the time period is "5000". Not "10000". And as you can see, that's not realistic.

Could anyone help me on sorting this. Please point out if there any errors in my accounting logic.


Thanks in Advance!

Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited June 25
    I have a feeling that I know what you're doing (wrong) here, but let me instead simply show you the entries that you should be making in Quicken for the two transactions you've described.
    1st entry for purchase, made with the credit card.  Entry is posted in the credit card Account:
    Debit (increase) Food & Dining Category   $50.00  (to increase the budget Category by $50)
    Credit (increase) Credit Card Account        $50.00 (to increase the amount owed on the credit card by $50)
    For sake of argument we'll say that this charge has brought your Food & Dining Category up to a balance of $10,000 and that the total balance of the credit card Account at that point is $12,000.
    Now the 2nd entry for the payment, an entry made within the Bank Account would be:
    Debit (decrease) Credit Card Account   $5,000   (to decrease balance owed on credit card by $5,000)
    Credit (decrease) Bank Account              $5,000   (to reflect the $5,000 payment out of the bank Account)
    At this point the balance in the credit card Account should be $7,000 and a spending report will still show that Food & Dining Category balance as $10,000.
    It appears to me that you probably are making that first entry correctly, but that you're making that 2nd entry improperly, perhaps as two separate entries?  That is, the entry in the Bank Account for $5,000 is being charged to the Food & Dining Category, reducing the total in that Category to the $5,000 you're seeing.  Then, over in the credit card Account you're making another entry, an entry for $5,000 posted in the "Payment" column, perhaps with the Category for that entry being the same Account?  A "self-referencing" entry made in that fashion would "magically" reduce the balance in the credit card Account without affecting any other Account in the file.
  • volvogirl
    volvogirl SuperUser ✭✭✭✭
    How are you "adding" the payment to the credit card account?  It should be just a TRANSFER from the checking account.  It does not touch the Food Category at all.  What is the category on the bank account payment?  It should be the Credit Card Account name in square brackets like [Credit Card].




  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    The credit card payment is a transfer from the payment account to the credit card account.  If you choose not to use a transfer transaction for the payment, use the same payment category in the payment account and the credit card account and the payment category should balance.