Changing Closes To causing issues

[bayparktreasurer]

Help!

I have been using PowerChurch Plus for 2 years now but am still learning and trying to wrap my head around all this stuff.

I have realized that some of the close to accounts that I had set up were wrong and now I would like to change them. I have closed out last year and haven't entered anything into this year yet but when I make the changes it screws up my equity balances. Here's an example:
I have a temporarily restricted account set up for VBS (3220-102) as well as the income (4220-102) and release (4820-102) accounts that go with that. I had set it up so that the income and release account close to the VBS account but I had also set the VBS expense account (5810) to close to it as well. Currently my equity balances are all zero (as they should be) but if I change the expense account to close to the unrestricted net assets account all of a sudden there is a balance for the VBS account on my equity sheet.

I had set up the temporarily restricted accounts as I understand that we have to be able to show that any designated funds were used for the proper purpose (and that's the impression I got from the PowerChurch manual) and I figured this would be the easiest way.

Is there anything I can do to fix this?

[JohnDMeyers]

You said that all of your equity accounts were zero. Do you have a checking account setup in PowerChurch?

At very least you should have the same amount in equity as you do in checking.

ASSETS
..checking $900.00

EQUITY
..unrestricted net assets $900.00

--------------------------------------------------
In addition, you have temporarily restricted net assets equal to the amount of unused temporarily restricted net income. If you restrict $500 in one year, and use $400, you should have $100 in temporarily restricted net assets

ASSETS
..checking $900.00

EQUITY
..unrestricted net assets $800.00
..temporarily restricted $100.00

----------------------------------------------------
If your expense accounts are erroneously set to close to temporarily restricted net assets, the $400.00 will also be subtracted.

ASSETS
..checking $900.00

EQUITY
..unrestricted net assets $1200.00
..temporarily restricted -300.00

-----------------------------------------------------
If you make corrections to your expense accounts, you should see this, again:

ASSETS
..checking $900.00

EQUITY
..unrestricted net assets $800.00
..temporarily restricted $100.00

-------------------------------------------------------

See if any of that helps you weed through your numbers. Let me know what are the actual values for your TOTAL ASSETS, TOTAL LIABILITIES, and TOTAL EQUITY.

[bayparktreasurer]

Hi John,

Thanks for the quick reply.

My apologies, when I said all my equity accounts were zero, what I meant was all the equity accounts that were supposed to be zero, were zero. I do have a checking account and 3 temporarily restricted accounts with balances and the total assets/liabilities equal total equity, so that part is working.

What I don't understand is why after the books are closed for the year and the equity accounts that were at zero all of a sudden have balances when I change the closes to account? I don't understand where those balances are coming from. The equity total is still the same as before so the funds are just redistributed but it is very confusing to me.

Can I just make corrections after I change what accounts they close to? How would I do that? Should each temporarily restricted equity account only have the 2 accounts closing to them? (the income and release accounts)

[JohnDMeyers]

I'll answer the last question first. Yes, you can make changes after to change the close-to account. You may not be able to do it in the same month as you would like to, if I understand correctly that you have closed the year, already.

The close-to information is affected when you transact an income account or and expense account.

For example, if 01-4280-101 closes to 01-3280-101, and you receive $100.00, I'll show you the before and after:

BEFORE:
ASSETS
..checking $900.00
EQUITY
..[3110] unrestricted net assets $900.00
-----------------------------------------------

You receive $100.00:
DB 01-1110-000 checking
CR 01-4280-101 temporarily restricted income [closes-to 01-3280-101]
-------------------------------------------------

AFTER:

ASSETS
..checking $1,000.00
EQUITY
..[3110-000] unrestricted net assets $900.00
..[3280-101] temporarily restricted net assets $100.00

---------------------------------------------------

Notice that you didn't directly transact 01-3280-101. It changed because you transacted an account that closes-to it.

---------------------------------------------------

Now, let's say you spend $50.00 in an expense account that incorrectly closes-to 01-3280-101.
DB 01-1110-000 checking $50.00
CR 01-5488-000 expense $50.00 [closes-to 01-3280-101]

ASSETS
..checking $950.00
EQUITY
..[3110-000] unrestricted net assets $900.00
..[3280-101] temporarily restricted net assets $50.00

-------------------------------------------------------
Now, you go into the Chart of Accounts, and the only change you make is that you change the closes-to on 5488-000 to 3110-000 and hit SAVE. You rerun the Balance Sheet, and you see this:
CR 01-5488-000 [closes-to 01-3100-000] SAVE

ASSETS
..checking $950.00
EQUITY
..[3110-000] unrestricted net assets $850.00
..[3280-101] temporarily restricted net assets $100.00

[bayparktreasurer]

I'll have to mull that over for awhile for it all to come together but I think I see what's happening.

Thank you for the examples.

Just to clarify, since we only have the one checking account all expense accounts should close to the unrestricted net assets account and the temporarily restricted accounts should only have its associated income and release account closing to it. Is that correct?

[JohnDMeyers]

Just to clarify, since we only have the one checking account all expense accounts should close to the unrestricted net assets account

Correct.



and the temporarily restricted accounts should only have its associated income and release account closing to it.

Correct

and the General Release Account 01-4999-000 closes to 01-3110-000 unrestricted.

[bayparktreasurer]

Thank you.

[bayparktreasurer]

One more question. To do the corrections do I just debit the temporarily restricted account and credit the unrestricted account or do I have to use the 4999 account?

[JohnDMeyers]

It depends on what you did.

A typical expense and release transaction looks like this:

Spend $50.00 and release $50.00

CR 01-1110-000 checking $50.00
DB 01-5476-000 some expense [closes to 01-3110-000] $50.00

DB 01-4210-101 specific release [closes to 01-3210-101] $50.00
CR 01-4999-000 general release [closes to 01-3110-000] $50.00

If you are undoing just the release part, and you used 4999 in the incorrect transaction, then you will want to use 4999 in the undo transaction.

You can view your past transaction in Fund Accounting / View Post Transactions, and you can use the REVERSE button at the bottom of the screen to make corrections.