accounting challenge

[maviszook]

Your assessment is correct: Payments from one checking account really should be made by the other. Thank you very much, Matt, for your response. Now to just find what went wrong!

So, even though both checking accounts may be accessible to both funds, do we still need to write physical checks between them? Okay, in asking, I think I understand. The only alternative to physical checks would be an electronic bank transfer.

This thought train leads me back to one of my earlier (unanswered) questions: Should my general operating account (checking) exactly correspond to deposits and withdrawals (checks written) from the checking account?

[maviszook]

But what this means at this point is: the church needs to write a check to the school for $1200 and the school needs to write a check to the church for $1200. Is this necessary for accountability? Is there really no way to do it via journal entries?

[Matt]

You can accomplish this by inputting the following journal entries, as long as the deficit in one checking account and fund is the same as the deficit in the other checking account and fund. If there are any differences in the deficits you would need to write a check from one account to the other.

Let's say that the school checking account (01-1130) has a deficit (i.e. credit balance) in the church fund of $1200. Then, let's say the church checking account (03-1110) also has a deficit (i.e. credit balance) in the school fund of $1200. Here's the journal entries you could input to transfer the funds to clear the deficits in both accounts:

Debit 01-1130 $1200
Credit 01-1110 $1200

Debit 03-1110 $1200
Credit 03-1130 $1200