Liability account not used to pay pension fund.

[NeilZ]

Hi all,

The past year our secretary/treasurer was getting used to using Powerchurch for our church's finances. I've been able to help her out, either by trying things out on my test system, or by searching the forum. I've seen some hints on how to fix this, but I'd rather be able to get a full explaination, both for myself, and for any others who may have this issue.

Payroll takes out funds each pay period for the Pastor's PCUSA Board of Pensions dues. This is a church liability. Payroll is setup properly, creating transactions to move from Pension Expense, to Pension Liability.

Problem is last year when the BoP bill came in, she paid the bill out of the expense (5000 series) account, instead of the liability (2000 series) account. So there is a surplus of funds showing in liability, which really should be zero each time the bill is paid.

So you see the dilemma, what transaction should I create to, in effect, zero out the liability account.

BTW .. our motto this year in Funds Accounting is No Reversals

[NorthPointe Baptist]

Neil,
I would suggest that you enter one correcting journal entry to correct the 2010 transaction(s). In the line description I usually enter a brief explanation such as reclass from/to and list the account #. If you haven't issued 2010 financial statements and closed the year, you can post to 2010.

debit: 0X-2XXX- liability account: line description = reclass from 0X-5XXX
credit: 0X-5XXX- expense account: line description = reclass to 0X-2XXX

Moving forward, the vendor's account info tab in Accounts Payable could be corrected to automatically credit the liability account so the error isn't repeated for 2011.

[NeilZ]

Neil,
I would suggest that you enter one correcting journal entry to correct the 2010 transaction(s). In the line description I usually enter a brief explanation such as reclass from/to and list the account #. If you haven't issued 2010 financial statements and closed the year, you can post to 2010.

debit: 0X-2XXX- liability account: line description = reclass from 0X-5XXX
credit: 0X-5XXX- expense account: line description = reclass to 0X-2XXX

Moving forward, the vendor's account info tab in Accounts Payable could be corrected to automatically credit the liability account so the error isn't repeated for 2011.

That's what I figured. The 2010 statements have been printed, but its not going to change them all that much.

And I made sure the vendor account info has been changed

THanks