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Step 1
Line an 8x8” baking dish with parchment paper, leaving overhang on 2 sides. Purée apple, cranberries, 1½ cups sugar, and 1 cup water in a blender until smooth. Transfer to a large deep heavy pot fitted with thermometer and cook over medium heat, whisking occasionally, until mixture is very thick and bubbly (it will sputter and splatter as it cooks; reduce heat if needed), 8–10 minutes.
Step 2
Whisk pectin and remaining ½ cup sugar in a small bowl, then gradually whisk into cranberry mixture. Reduce heat to medium-low and continue to cook, whisking often, until thermometer registers 200°, 15–20 minutes (mixture will be dark red and extremely thick).
Step 3
Whisk lemon juice into cranberry mixture, then scrape into prepared pan; smooth top. Let cool until set (it should feel firm when you gently press it), at least 4 hours.
Step 4
Just before serving, unmold jelly onto a cutting board and cut into 1” squares. Toss jellies in sugar to coat.
Step 5
DO AHEAD: Jelly can be made 1 week ahead. Store in pan, tightly wrapped, at room temperature. Cut and roll in sugar just before serving.