Hello,
I hope you can follow this question. We have an account that is used for wash through (payment of Angel Food orders) I show payments to this account like this: debit bank account, credit liabililty account. When the check is cut to AFM I credit bank account, debit liability account.
The problem came when I mistakenly entered a building rental in the AFM wash through account. This resulted in my AFM fund balance showing a positve balance after paying AFM. If should have shown a zero balance. So, solution is easy, right? I reversed the entry. I credited the bank account for the rental amount & debited the the liability account. Then entered the rental amount to the correct account. However, after posting, my AFM Account Fund Balance still shows the building amount. The correct account also shows the rental amount in its Fund Balance.
When I look at the transactions in the AFM Account, they show a zero balance as they should, but the AFM Fund Balance (System Generated) still shows the rental amount.
I'm looking for clues in your explanation, and here's what I think happened.
You said that your correction entry credited the bank account and debited the liability account.
Your original incorrect entry was apparently a check that was cut for building rental, which would like this:
CR checking account for rental (correct)
DB liability incorrectly for rental (incorrect)
You reversal entry should have been
DB checking
CR liability
(note: you could have simply CR liability and DB building rental, because the original CR of checking was correct)
I think you made this instead
CR checking
DB liability
Which would double the incorrect entry instead of reversing it.
Then, when you cut the check for the building rental, you did this:
CR checking
DB building rental
If this analysis is correct, you will need to do the following:
DB checking (2x original amount)
CR liability (2x original amount)
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I don't think I was clear when I posted my original problem:
Angel Food Ministries Acct
People give us money to pay for food they order. We pay Angel Food Ministries with one big check. So when people pay for their food order I debit the bank account for the amount paid:
Debit Checking Acct $500
Credit Liability $500
Cut check to pay AF
Credit Checking $500
Debit Liability $500
Mistake
Received check to church for use of social hall
Debit AF Checking $150
Credit AF Liab $150
Reverse Mistake
Credit AF Checking $150
Debit AF Liab $150
Then
Debit Current Checking $150
Credit Hall Rental Acct $150
Current shows income as it should
AF still shows $150 balance & should be 0
The check for hall rental is income to church, not an expense.
Is that a better explanation of my problem?
Thanks again
When I look at the transactions in the AFM Account, they show a zero balance as they should, but the AFM Fund Balance (System Generated) still shows the rental amount.
The system generated entries only happen in equity accounts. This means somewhere in your transactions you were effecting an income account and not just the liability accounts you mention in your posts. You may want to look at all the transactions again and check the account numbers to make sure that they are using the accounts you expect. I think you will find your original wrong entry credited an income account not the liability account you mentioned in your post.
