Restricted funds and expense

[dpetherbridge]

I'm rather new to this restricted funds accounting.

Let's say I have a restricted Flower fund account.

When I receive money from members I debit 1000 level checking and credit the 4000 level income for Flower fund.

We don't have an expense category for flowers. So when I pay for flowers and credit checking what account do I debit for the purchase? Do I debit the corresponding equity account, the income account or something else. And then how does the release account come into play?

Thanks,
Dan

[NeilZ]

I'm rather new to this restricted funds accounting.

Let's say I have a restricted Flower fund account.

When I receive money from members I debit 1000 level checking and credit the 4000 level income for Flower fund.

We don't have an expense category for flowers. So when I pay for flowers and credit checking what account do I debit for the purchase? Do I debit the corresponding equity account, the income account or something else. And then how does the release account come into play?

Thanks,
Dan

Dan,

you should setup an expense account for flowers. When you pay the bill through Accounts Payable, you really need to have a Vendor tied to the expense account. You should not be hitting the equity accounts directly.

The release account comes about when you're writing the check in AP, and you then click on the release restricted funds. If you have the temporarily restricted fund setup properly, the system will then enter the correct transactions to take care of the release account.

[dpetherbridge]

Thanks Niel,

I set up expense accounts for these temp restricted funds.

What I don't understand is why the balance sheet doesn't shoow the real balance in each of those funds after I've released them.

For example we have a food shelf fund.

Beginning balance was $10,378. Expenses were $1196.10 and income was $487.05.
Balance sheet says $8472.53.
The temp restricted release acct on the income statement is ($1196.10)

So why doesn't the Balance sheet state $9668.95 (10,378+487.05-1196.10)

The difference is the $1196.

Is there something that moves the money from the temp rest rel to the equity (balance sheet) account?

Thanks,
Dan

[JohnDMeyers]

What equity account does your expense account close to? It should close to 3110-000 (unrestricted net assets)

Run a Changes in Equity report. You may see something there, too.

[dpetherbridge]

I clearly have set something up wrong.

When I run a change in equity report it not only lists the expense but it then repeats the exact same amount in release from restrictions. Thus my balance if off by that amount.

This is what have done. I expense the purchase to a 7xxx account that I set up as one where I checked the box this account uses restricted money.

I credit the checking account 1110, and debit the 7xxx account. Then I hit the restricted money button and choose the restricted account and it enters the restricted journal entries.

What am I doing wrong that it essentially creates the expense twice?

Thanks,
Dan

[JohnDMeyers]

Can you check what equity account the expense account closes to?

Go into Fund Accounting / Setup / Maintain Chart of Accounts
Locate your 7xxx expense account
Click on Details
See what equity account is listed.

[dpetherbridge]

It closes to 3221, the equity account for that fund. Should it be 3110, the unrestricted net assets account?

[dpetherbridge]

I just fixed the account to close to 3110 and that fixed the problem. Thanks for the help. What a relief.