Change Account Type

[jordan2k510]

How do I change an income account to an expense account? The Board recently decided that reimbursements to the church for expenses should not be tracked as income instead should be tracked for what they really are reimbursement of expenses. Historically, I have tracked them in an income account. Now I want to change this account to an expense account. How do I do this?

[JohnDMeyers]

I need an example. I can't picture what you are doing.

If someone spent $35.00 for flowers, and the church owed them $35.00, how would you show that as an income?

[jordan2k510]

Thank you John for your prompt reply.
In the past when someone (say the Benevolence Fund Treasurer) spent $35 for flowers they purchased with the curch credit card. Then wrote a check to the church for $35. This would be deposited as income.

CR Income account DB checking. However, this overstated true income since the church would need to pay the Visa bill. So what I would rather do is have an expense account called Reimbursable Expense.

Pay the Visa
CR Checking DB Reimbursable Expense

Reimburse by Benevolence
CR Reimbursable Expense DB Checking

I havetransactions against the Income account that I want to move to this reimbursable Expense. Is there a way to move an Income account into an expense account in PC?
Judy

[JohnDMeyers]

Let's look first at how things should be set up. At the end, I will figure out what to do with your income transaction.

The credit card could be set up as a liability.

Step 1) When you make a credit card purchase:
CR Credit Card liability
DB Categorized expense in General Fund

Step 2) When you pay off the credit card:
CR General Checking
DB Credit Card liability

If you receive money from another fund toward the Credit Card purchase, do you want to record the expense in the other fund? If so, it would take the place of the transaction you made in the Categorized expense in General Fund (Step 1).

Step 3)
CR Benevolence Fund checking
DB Benevolence Fund expense

Step 4)
Deposit in General Fund:
DB General Fund checking
CR Categorized expense in General Fund ("zeros out" the General Fund expense, because the expense is shown in the other fund)

If that is not what you want to do, let me know.

If this is what you want to do, then all you need to do is:
DB income
CR Categorized expense in General Fund

But, you will need to show the expense in the other fund.

[jordan2k510]

Hi John,
No I do not need to perform any transactions in the other fund as the fund has its own treasurer who handles the transactions.
Judy

[JohnDMeyers]

If the money comes into the General Fund first, as income, and then to the Benevolence Fund, and then back to the church, you should CR a transfer account when it comes back into the church, so as not to show it as income twice.

Step 1) and Step 2) would be how to handle the credit card transactions.

[jordan2k510]

When the money comes into the fund (as a check from the Benevolence Fund in our example) does it have to come in as income? Is there another option?Currently it comes in as income. I think we are overstating income since it is actually to reimburse an expense (CC bill) that the General Fund will pay.

[jordan2k510]

If this is what you want to do, then all you need to do is:
DB income
CR Categorized expense in General Fund

This last part that you wrote in a post yesterday (above) Is this how I would move the income currently posted to an expense? There is no way in PC to merge an income and an expense account?

[JohnDMeyers]

It depends on what you to show.

By doing a CR to the expense account, you will be decreasing the recorded amount of the expense. Maybe that is what you want.

In other words, if you spent $100 and $35 was given back to you, you technically only spent $65. That is what a CR in the expense account will show.

Another way is to create a transfer account and CR that (something in the 9000s).

Then, you will be showing a $100 expense and a separate transfer of $35.

It's up to you, how you want to show it.

I like to show the total expense in the expense section, so I would be setting up a transfer account.

[jordan2k510]

Thanks John. Then how to move the income balance to the transfer account?