Deposit from Property Sale

[Dkgross]

I first posted this in the User form....actually didn't realize where I posted it as I don't use this function enough. Below is the posting with one resposne.

We recently sold property and I am wondering the correct way to record/deposit the proceeds from the sale? Do I need to enter it through the Contribution module or directly into Fund Accounting by entering a transaction?

Hi,

FWIW ... this question is probably best asked in the Accounting forum, but here goes:

I would just use the Funds Accounting transaction. This really isn't a Contribution, so using that module is really not necessary.

Also, if you have your building and land as assets in the accounting module, this will allow you to debit that asset account properly.

Thanks - that was the direction I was thinking it should go but wanted some input. The property was not listed as a asset....probably should have been....I suppose I could set it up now so the sale was reflected. I am a computer IT person and not a trained accountant so I did the basic setups in Powerchurch to track income and expenses.

[JohnDMeyers]

I agree with what NeilZ wrote.

Since you already owned the land, it should have been an asset on your balance sheet. If you use Contributions, it will count it as new income, which it isn't. It is the sale of an existing asset.

If you showed it as an asset, the CR the building asset and DB the checking account for the amount of the sale (or whichever bank account you put the cash into).

If you didn't show the building as an asset, you can first add it, then sell it. To add it (assuming it has been owned for more than 1 year) DB Building Asset and CR Equity 01-3110-000.

[Dkgross]

I agree with what NeilZ wrote.

Since you already owned the land, it should have been an asset on your balance sheet. If you use Contributions, it will count it as new income, which it isn't. It is the sale of an existing asset.

If you showed it as an asset, the CR the building asset and DB the checking account for the amount of the sale (or whichever bank account you put the cash into).

If you didn't show the building as an asset, you can first add it, then sell it. To add it (assuming it has been owned for more than 1 year) DB Building Asset and CR Equity 01-3110-000.

Could I simply add it as an asset (listing the price paid for the property) and then show the sale - so that it shows the profit/loss? Wanting to make sure that I wouldn't have had to post the various payments made against the property to the bank over the past several years - to this asset. Or any rents received for the property as I processed all of this through income & expense accounts.

[JohnDMeyers]

I always make sure to introduce myself as a high school math teacher, not an accountant. I have been doing our church books for over 20 years.

If I was doing this for my church, and I hadn't shown the building on the books for several years, I would do this, given it is almost October (assuming your books start in January and run through December).

I would enter the value of the building on January 1, 2010. I would make the entry today, date it for Jan. 1, 2010, and post it in the current month. (there are no accounting reasons for all this, just practical reasons).

Then, I would make one income entry for the total rent received year-to-date. Then I would make one expense entry year-to-date, if applicable.

To retire the asset off the books after the sale. Let's say the building is an asset worth $100,000 and the sale was $95,000.

I would record the loss either as an expense or a negative income.

DB checking $95,000
CR building asset $95,000

DB loss on building (negative income or expense) $5,000
CR building asset $5,000

If you make $5,000 profit on the building I would show that as a positive income.