1. How to Handle Petty Cash in QuickBooks Online and Reconcile It to Physical Cash
Petty cash works like a small “cash bank account” in QBO. To manage it correctly:
A. Create a Petty Cash Account
- Go to Settings > Chart of Accounts.
- Click New.
- Category = Cash and Cash Equivalents.
- Detail Type = Cash on Hand.
- Name = Petty Cash.
B. Fund the Petty Cash (Move Money from Bank Account)
- Click + New > Transfer.
- Transfer From: Your bank account.
- Transfer To: Petty Cash.
- Enter the amount.
This records that the cash moved from the bank to the petty cash box.
C. Record Petty Cash Expenses
- + New > Expense.
- Payment Account: Petty Cash.
- Payee & Category → select proper expense account (Postage, Snacks, Office Supplies, etc.).
- Save.
D. Reconcile Petty Cash to Physical Cash
- Go to Accounting > Reconcile.
- Select Petty Cash account.
- Ending balance = actual physical cash in the box.
- Check off each petty cash expense you’ve recorded.
- The difference should be zero. If not, record an adjustment using + New → Expense or Journal Entry, account = Cash Short/Over (or Miscellaneous Expense).
Example: If QBO shows $200 petty cash but you count $180 → record $20 shortage.
Petty Cash Summary
- Create a separate petty cash account.
- Transfer funds from bank to petty cash.
- Record petty cash expenses from that account.
- Reconcile to the actual physical cash.
- Adjust shortages or overages.
2. Why QuickBooks Online Won’t Allow Editing or Deleting a Reconciled Transaction
QBO protects reconciled data because changing or deleting reconciled transactions breaks past reconciliations.
A. The Transaction Is Marked “R” (Reconciled)
Editing or deleting an R-marked transaction would:
- Change past reconciliations
- Throw off beginning balances
- Break your audit trail
B. The Bookkeeper or Accountant Closed the Books
- If books are closed with a closing date and password, you cannot change anything before the closing date.
- QBO will show a lock icon or block edits.
- Check via Settings > Account and Settings > Advanced > Close the books.
C. Transaction Type Doesn’t Allow Editing After Reconciliation
Examples:
- Credit card payments that were auto-reconciled
- Transfers that match in two accounts
- Deposits already included in a locked reconciliation
How to Edit or Delete a Reconciled Transaction (Safe Method)
Option 1 Change the Status from R → C → Blank
- Go to Register.
- Find the transaction.
- Click the “R” until it becomes blank.
- Edit the transaction.
- Re-reconcile it in the next reconciliation.
Option 2 Use “Reconciliation Discrepancy Report”
This lets accountants adjust changes properly without breaking previous reconciliations.
Option 3 Ask Accountant to Unlock the Period
If a closing date is blocking you.
Best Practice
- Do NOT delete reconciled transactions unless you know exactly what you are doing.
- Instead, reverse or create an adjusting entry, especially for accounting periods already reported to IRS or management.