Permenantly Restricted or Temp

[FBCVandalia]

Our church recently purchased this software and I'm beginning to set up the accounting portion.
Our church has an Educational Trust (revocable) held by an Investment Company. The interest is used for scholarships.

We currently do not have this listed on our chart of account and the interest is not recorded any where. A Manually generated quarterly report is given to the church body.

What would be the best way to handle this?

[JohnDMeyers]

The interest that can be used for scholarships should be considered temporarily restricted.
Create a temporary restriction with an equity account, income account, specific release account, by using the Restriction Wizard and receive the money into this account.

Create:
01-3210-000 scholarship payment (temporarily restricted)
01-4210-000 scholarship income (closes to 01-3210-000)
01-4810-000 scholarship release (closes to 01-3210-000)

The principle would be permanently restricted. You can simply create an asset account and a permanently restricted equity account (I am assuming this principle was not given to the church in 2012, but sometime before).
If the principle is $10,000, then the entry would be:
DB 01-1820-000 Scholarship Trust $10,000
CR 01-3320-000 Scholarship Trust (in the permanently restricted section of equity) $10,000

[FBCVandalia]

Thank you for your reply. This is what I was thinking but was not sure. Thanks again for your assistance.

[FBCVandalia]

Each quarter the investment company sends a report showing how much interest has been earned. Should I record this? What account should I use?
Would recording the interest change how we record the funds we get for the scholarships?

Thanks for your help

[JohnDMeyers]

Does the interest get paid out, or does it get added to the permanently restricted principle?

[FBCVandalia]

The interest is used for scholarships - when interest was higher part of it went into the principal.
But now that the interest rates are lower - all of it is being used for the scholarship we pay out.

[JohnDMeyers]

I think that if the formula is supposed to be this:

Principle + Interest - payments.... then it would be appropriate to show the Interest being added to the principle, even if it is less than the payments.

I'm just saying this is how I would do it.
Monthly Interest: $126
Monthly Outlay (scholarship payment $135)

Create another restriction under permanent restriction income called increase to scholarship.
01-3390-000 scholarship market changes (permanently restricted)
01-4390-000 scholarship principle changes (permanently restricted - closes to 01-3390-000)
01-4890-000 release

To show monthly interest increase in principle:
DB 01-1820-000 scholarship $126
CR 01-4390-000 scholarship principle $126

Show scholarship payment coming in from trust
DB 01-1110-000 checking $135
CR 01-4210-000 scholarship income (temporarily restricted)

Make payment to someone's college for $200:
CR 01-1110-000 checking $200
DB 01-5820-000 scholarship gift payout $200 (closes to 01-3110-000 unrestricted net assets)
DB 01-4810-000 scholarship release $200 (closes to temporarily restricted scholarship equity)
CR 01-4999-000 general release $200 (closes to 01-3110-000 unrestricted net assets)