How to Add Interest for Credit Card Payments in QuickBooksby Kate Bluest
If you accrue interest on your credit card account, you must record it in your QuickBooks file to keep your records accurate. These types of expenses go into an interest expense account. This account is helpful to let you know the interest expenses you are paying on your accounts from month to month. You can usually avoid these interest expenses by paying your credit card in full each month. Most standard Chart of Accounts in QuickBooks already include an interest expense account. If not, you can add the account using the "Add New Account" dialog box.
Open QuickBooks, hold down the "Ctrl" key and click the "A" key to open the "Chart of Accounts." You can also select "Lists" or "Company" from the top menu and select "Chart of Accounts" in either submenu to open the "Chart of Accounts." Clicking the "Chart of Accounts" icon in the "Company" section of the "Home" page will also open the "Chart of Accounts."
Double-click the credit card account in the "Chart of Accounts" list to which you want to add interest to open the register for that account.
Go to the first blank line in the credit card account register. Enter the date of the transaction in the "Date" column and hit the "tab" key twice to move to the "Payee" column. Enter the company name in the "Payee" column and hit the tab key. If the cursor moves to the "Charge" column, skip the next step. If the "Name Not Found" dialog box appears, go to the next step.
Click the "Set Up" button in the "Name Not Found" dialog box to go to the "Select Name Type" dialog box. Click the "Vendor" radio button in the "Select Name Type" dialog box and click the "OK" button to go to the "New Vendor" dialog box. Enter a "Vendor Name" on the top line in the "New Vendor" dialog box and fill out all the remaining information requested. Click the "OK" button when you are done to save the vendor account and return to the credit card register. Tab to the "Charge" column.
Enter the interest fee amount in the "Charge" column in the credit card register and hit the tab key to go to the "Account" column.
Type "Interest." If your interest expense account appears, tab to the next column and click the "Record" button in the lower-right corner of the register to record the transaction. Skip the remaining step. If the account does not appear, leave the word "Interest" in the "Account" column and hit the "Tab" key to open the "Account Not Found" dialog box. Go to the next step.
Click the "Set Up" button in the "Account Not Found" dialog box to open the "Add New Account" dialog box. Name the account "Interest" or "Interest Expenses" following the naming norms in your "Chart of Accounts." "Click the "Save & Close" button to save the account, close the dialog box and return to the register. Click the "Record" button in the lower-right corner of the register to record the transaction.
- You can also add interest charges during your credit card reconciliation. Right-click the credit card account. Select "Reconcile Credit Card." Enter the interest amount in the "Finance Charge" field and select "Interest" from the "Account" pull-down list. Click "continue" to proceed with your reconciliation following on-screen instructions.
- A Chart of Account is an ordered list of accounts. If you are unclear about how to add an account to your Chart of Accounts, contact your accountant or CPA before making the change.
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