Accounting for restricted fund spending

[M_artin]

Thanks!
I begin to see the real issue now: The problem is that this should have been set up as a "pass through" donation and not as a "temp restricted".
When the expense acount, which actually is a liablity, is debited for the expense it doesn't close to 01-3110.
Now have to think about a way around that...
Anyway, your help is appreciated!

[NeilZ]

Thanks!
I begin to see the real issue now: The problem is that this should have been set up as a "pass through" donation and not as a "temp restricted".
When the expense acount, which actually is a liablity, is debited for the expense it doesn't close to 01-3110.
Now have to think about a way around that...
Anyway, your help is appreciated!

I know John will ask this, but .. why is the expense a liability ??

[M_artin]

Ok, what it is is a donation we received for our synodical camp. We submit those donations to our synod office with our monthly remittance. The payments to the synod (we are Lutherans ) has been set up as a pass-through showing under the liabilities accounts (2...).
So, our original transaction (the one that ended up showing a negative amount in the balance sheet) was along the line John had suggested. It looked like this:
DB 01-1110 Checking Account - $1000
CR 01-2310 Synod Benevolence - $800
CR 01-2320 Canadian Lutheran World Relief - $100
CR 01-3233-112 Camp - $100 (this is the offending line, I guess)
DB 01-4833-112 Camp - release restricted amount - $100
CR 01-4999 Released from restriction - $100
The balance sheet then showed a $-100 for the Camp account.

I'm looking at 3 more accounts with a similar situation. Wonder if I should set up pass-through accounts for them all and then reverse and re-enter contributions and payments.
Thanks!

[NeilZ]

Ok, what it is is a donation we received for our synodical camp. We submit those donations to our synod office with our monthly remittance. THAT part has been set up as a pass-through showing under the liabilities accounts (2...).
I'm looking at 3 more accounts with a similar situation. Wonder if I should set up pass-through accounts for them all.
Thanks!

If they are indeed "Pass Throughs", that is, they are NOT part of the standard church income and not part of the church's expenses, then they can probably be setup as a pass through.

[JohnDMeyers]

Let me say, "ahhhhh".

You don't need release accounts for the liability situation you have setup.

These are all the "offending" lines:
CR 01-3233-112 Camp - $100 (this is the offending line, I guess)
DB 01-4833-112 Camp - release restricted amount - $100
CR 01-4999 Released from restriction - $100

After you REVERSE these, here's a typical scenario:

Money comes in:
DB 01-1110 Checking Account - $1000
CR 01-2310 Synod Benevolence - $800
CR 01-2320 Canadian Lutheran World Relief - $200

Money goes out:
CR 01-1110 Checking Account - $1000
DB 01-2310 Synod Benevolence - $800
DB 01-2320 Canadian Lutheran World Relief - $200

That's it!

[M_artin]

Yes, John, and that's what we have done with our "regular" income and expenses for the liability account.
The "camp issue" is different though.
Unfortunately, it was set up so that the income goes into a temp restricted account. And I don't know how to correctly get it out there again. From what I've learned we could have, and still can
a) set up the accounts as a pass-through, or
b) create an expense accounts related to the temp restricted income accounts (because that's why I couldn't apply your solutions).
Makes sense?

And one more question: Let's say we have income for the pastor's discretionary expenses (like food tickets, etc.) and set up a temp restricted account for that. Now there is an actual expense, like a teenager going to camp and we want the funding come from the pastor's discretionary expenses account. Can we book the expense under any account (e.g. youth ministry) and release the amount from pastor's discretionary?

Thanks again for all your thinking and support!
Can't say enough about what you knowledgable guys are doing here...

[JohnDMeyers]

If you already restricted income, then the way to "undo" it is to release it. But pay for the item using an expense account that closes-to unrestricted equity, not a liability account.

If you have $200 that was already restricted, then "undo" it by spending it like this:
CR 01-1110-000 checking $200
DB 01-5436-000 some expense $200 [closes-to 01-3110-000]

DB 01-4810-000 release restricted income $200 [closes-to 01-3210-000]
CR 01-4999-000 general release income $200 [closes-to 01-3110-000]

As far as using the restricted money for youth, it depends on what the restriction is. If a donor gives money, and restricts it only by saying, "pastor's discretion", then it is ok.

If the church board placed the restriction on the money, then it would be up to the church board to decide.

[M_artin]

Thanks, John!
That will resolve all the issues. We will still edit the Chart for the future to make things more clear.
I called PowerChurch.com letting them know how much your and other member's help is appreciated.