How to make an entry (transfer funds to offset expense)

[Heidilr1]

We keep our funds separated in 3 accounts - General Fund, Missions Fund & Restricted Fund. I recently transferred funds from the Restricted Fund to the General Fund to pay for some expenses made from the General Fund. I know how to record the transfer of cash, but I'm not sure what the reduction in expense would be. I'm crediting the expense account, but what is the offsetting debit? It's not cash (cash was debited when I made the cash transfer).

[NeilZ]

We keep our funds separated in 3 accounts - General Fund, Missions Fund & Restricted Fund. I recently transferred funds from the Restricted Fund to the General Fund to pay for some expenses made from the General Fund. I know how to record the transfer of cash, but I'm not sure what the reduction in expense would be. I'm crediting the expense account, but what is the offsetting debit? It's not cash (cash was debited when I made the cash transfer).

When you transferred the money, I'm guessing you used the transfer accounts, correct ?? That should move money from the fund 2 checking account, to the fund 1 checking account.

When you paid the expenses I'm also guessing you wrote a check to cover that, and you (at that time) properly used the correct accounts to account for the expense of the check.

Is that the case ??

[Heidilr1]

Yes - when I wrote the check (from the general fund), I debited the expense account and credited the checking account. Now I'm bring the money from the restricted fund to "reimburse" the general fund. I've accounted for the cash movement using transfer accounts.

As I think about it, I think my question is: How do I show the expense as an expense out of the restricted fund and not out of the general fund money? Is the only way to do this by having expense accounts associated with the restricted fund? Starting to get a little complicated if I do that...

[JohnDMeyers]

First off, just as a reminder, the restriction is on the income, not on the expense.

Since you are paying for the items out of the General Fund, and just transferring money in from the restricted fund to reimburse the General Fund, then the expense should be shown in the General Fund, and the transfer in the Restricted Fund.

To pay for a $100.00 item:

General Fund (pay for expense)
CR 01-1110-000 checking $100.00
DB 01-5500-000 expense $100.00

Restricted Fund (reimburse General Fund)
CR 03-1110-000 checking $100.00
DB 03-9010-000 transfer $100.00

Release Restriction (on income)
CR 03-4999-000 general release (income)
DB 03-4810-000 specific item release (income)


General Fund (receive reimbursement)
DB 01-1110-000 checking $100.00
CR 01-9010-000 transfer $100.00

[Heidilr1]

Is there a way to show the "reduction" in the expense from the general fund? I want to show that certain expenses were paid for from the restricted $$, not from the general fund budget, but I don't necessarily want to have to show the activity over in the restricted fund (fund 3). In other words, the expense was paid for from the general fund, I'd like to keep all activity in the general fund, but want to show a "reimbursement" (to reduce the general fund expense) from the restricted fund.

[JohnDMeyers]

Change the last step from this:

General Fund (receive reimbursement)
DB 01-1110-000 checking $100.00
CR 01-9010-000 transfer $100.00

to this:

General Fund (receive reimbursement)
DB 01-1110-000 checking $100.00
CR 01-5500-000 expense $100.00

It's totally appropriate to do it this way, and there have been times that I have done this. The only real difference is that it reduces the income-over-expense amount in the General Fund, which is what you are trying to do, I reckon.