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NPMLBOOKKEEPER
Jul 25, 2022 4:30 PM UTC
Solved

Bank Interest

Our bank adjusted a monthly interest payment by debiting our bank account 2 weeks later.  How do I enter this in QBO.

Rainflurry
RainflurryAnswer
Jul 29, 2022 10:57 PM UTC

@NPMLBOOKKEEPER 

 

Just write a check (New > Check) for the amount of the withdrawal.  Choose your bank as the payee and, under Category, choose the same interest income account that you use during your reconciliation process. 

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5 replies

Pete_Mc
Jul 29, 2022 3:09 AM UTC

The exact same way you enter the Interest Deposit, only as a Withdrawal. :)

 

I'm assuming every month you make an payment something like:

06/30/2022   Interest                                                                           0.05

                       Interest Income

 

So to that same account you would do:

07/05/2022   Interest                                                     0.02

                       Interest Income       Memo: Interest Adjustment by Bank 

 

And if you don't have an Interest Income Acct and just put it in some other Income Acct, it doesn't matter.  You just need to make the Withdrawal/Adjustment out of the same Account you put the Interest into.  When you're done, that Interest Income Account should now show the correct amount of Interest earned YTD.

 

NPMLBOOKKEEPERAuthor
Jul 29, 2022 3:07 PM UTC

I normally enter interest during the reconciliation of the bank account.  Do I make the adjustment entry with a journal entry?  Or, can a make a deposit to the interest account using a negative number?

Pete_Mc
Jul 29, 2022 3:35 PM UTC

Yes, but in the reconciliation process, do you not make a Deposit to your Bank Acct in the amount of the Interest.  So what I showed first as the Deposit should sort of match up with what you see in your Bank Acct Register in QBs.  Not really any different than any other Deposit made to that Acct except that rather than being connected to Sales Income or a specific Client paying an invoice, this is associated with Interest Income. 

 

The old QBs Chart of Accounts came with an Interest Income Account, not sure if your version has that and it's what you're using, or if you're just putting the Interest into "Income" or some other Other Income Acct.  It really doesn't matter.  You just need to use the same one here.

 

So to make the Adjustment you'd go to the Bank Acct where they made a change and simply make an entry like you would if you were paying a bill or writing a check.  The Payee would be "Interest" or what ever you typically call your Interest Deposits.  If you just say "Deposit" then in this case I'd call it "Interest" and when QBs pops up to ask you if this is a Customer, etc., choose Other.

 

Next you enter the amount they took away in the Payment Column.  Then when you Categorize this Transaction, you use the same Acct that you do when you record the monthly Interest Deposits.  So if the end of last month you put in $10 of Interest as a Deposit, then they came back and said Oops, you only get $8.  Then you'd show a $2 Withdrawal (or Payment if it's the Checking Acct).

 

And if I totally misread and they gave you MORE Interest, then it would just be another Transaction entry like you do every month.  Just you'll have two for this month.

 

I'd also add to the Memo field that this is an Adjustment made by the Bank.  Word it any way you want.  But make it clear and simple so not only will you remember what this extra Interest Adjustment was in a year or two, but your Accountant will also not have to call you to ask about it if they happen to see it. (e.g. "Adjustment by Bank on June Interest earned")

 

Bottom line is you just need to Adjust the Account you put Interest into to make it match what you get from the Bank at the end of the year if you happen to make enough Interest in that Acct to generate a 1099 from them. I really do not like Journal Entries for this kind of issue, I'd like to see an actual Transaction that matches the Bank Statement and can be Reconciled.

 

Actually that brings up another question which may make some modifications to the above.  I'm assuming the Bank actually shows a Transaction where they took the money back.  I hope they didn't just take it and it does not show up on next months Statement.  Even if it does not show up, your Ending Balance will (should) still match.  So you may be making off one additional transaction even if it is not on the Bank Statement.  (I'd be shocked if it isn't, just want to point it out in case the bank is playing games with their records.)

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