Allocating an AR refund as CO

[mbanas]

I received monies for a retreat and posted the payments in accounts receivable back in September to an account designated for retreat income (01-4610-000). The retreat ended up costing less than anticipated, so the people will be receiving a refund. Not everyone wants an actual refund.

Some people want their "refund" to be appropriated as a contribution to the ministry.

Some people want their "refund" to be a deposit for next year's retreat.

Those who want their "refund" to go towards next year's retreat also want it to be able to be applied to someone else's retreat deposit for next year should they themselves decide not to attend.

Some people want a regular refund.

Does anyone have any guidance they would be willing to give to help me through these variables?

Thankful for your help,
Susan

P.S. I am using version 11.5

[JohnDMeyers]

Since the retreat income probably wasn't tax deductible (I'm assuming it went for the cost of the retreat), you could just every their refunds and let them decide what to do with it.

If they give it as a charitable contribution, then record it as a normal offering.

I recommend against holding money for someone for next year's retreat. Our theory is "we're a church, not a bank".

I would give refunds in this manner:
CR 01-1110-000 checking
DB 01-4610-000 retreat income

[mbanas]

John,
I sent your reply to the ministry's "board" with the recommendation that I simply refund the monies and let the people take their own action of sending it back in as a donation and this is the reply I got:

Can't you just show a debit to take all the contributions out of accounts receivable and then show it as a new credit to contributions instead of a transfer? The software is just our accounting, it doesn't move the actual money. We have the retreat attendees authorization to do that.

As for the keeping of their monies for the next retreat, we can just send that back to them.

I'm not sure how to reply to this question. Is that something I can do and if so, how?

Thank you, John, for helping me.
Susan

[JohnDMeyers]

Yes, you can make the correction as I described, and make a new contribution.

Let's say you collected $100 the first time around, and the actual cost was $70.

If you have a Contribution Fund 201 set up for receiving the money, and Contribution fund 100 for tithes, it should look like this:
Contribution Fund 201
DB: 01-1110-000 checking
CR: 01-4610-000 retreat income

I would go to View Posted Contributions, and REVERSE all of the original Contribution Postings. (There's a REVERSE button at the bottom of the screen). This will make corrections in Contributions and Fund Accounting (after you post in both).

Then make this entry in Contribution Fund 201
Date, envelope number, $70

Then make this entry in Contribution Fund 100:
Date, envelope number, $30

And post in Contributions and Fund Accounting

As long as the members gave you permission to do this, you should be all set.

[mbanas]

John,
I apologize for how overwhelmed and under qualified I feel. I need to ask a few more questions in order to understand your directions.

Are you saying I need to create a new Contribution Fund called 201 - and use DB: 01-1110-000 (checking) and CR: 01-4610-000 (retreat income) during my set-up?

Then you said:

I would go to View Posted Contributions, and REVERSE all of the original Contribution Postings. (There's a REVERSE button at the bottom of the screen). This will make corrections in Contributions and Fund Accounting (after you post in both).

I'm not sure what this step means because these were not originally contribution postings, they were posted in accounts receivable. I'll stop here (with my questions) before going on to your next steps...

Thank-you for your kindness. I am sure people like me can be a challenge to your grace and patience.
Susan

[JohnDMeyers]

Susan:

I used to be a high school math teacher. The challenge for me is to try to make my answers understandable.

When you said that you received funds already, I assumed you did it through Contributions.

If you received them and only made a Fund Accounting Entry, with my same assumptions, ($100 original, $70 retreat, $30 charitable contributions), then do this:

In Fund Accounting, you only need to make a correction entry.
CR 01-1110-000 checking $30 x number of people receiving refunds
DB 01-4610-000 retreat $30 x number of people receiving refunds

In Contributions:
Contribution fund 100 tithes:
date, env#, $30 for each person

Note: The contributions will put the $30per person back into checking.

[mbanas]

I am sure the problem lies more in my communication skills than yours! I think your reply is starting to make sense to me. I will be out of town tomorrow and will return to this on Friday. I will follow your new instructions and will hope it goes without a "hitch" and that I will have nothing but good news to report!
Thank you,
Susan

[mbanas]

I am back to the problem at hand and have a question BEFORE I make a mistake.

When you say,

If you received them and only made a Fund Accounting Entry, with my same assumptions, ($100 original, $70 retreat, $30 charitable contributions), then do this:

In Fund Accounting, you only need to make a correction entry.
CR 01-1110-000 checking $30 x number of people receiving refunds
DB 01-4610-000 retreat $30 x number of people receiving refunds

In Contributions:
Contribution fund 100 tithes:
date, env#, $30 for each person

Note: The contributions will put the $30per person back into checking.

I just want to make sure you know that I received the $100 original in Accounts Receivables (created an invoice, showed the payment in full, and then posted A/R's, and then posted fund accounting).

Is that what you mean when you ask that I "received them and only made a fund accounting entry?" If that is what you mean, then I will follow your directions. If that is NOT what you mean, then I will wait for different instructions.

Also, one person wanted a refund check (instead of turning it into a donation). I wrote a manual check but I have not entered the check into the A/P module yet. As I do, which accounts should I debit and credit?

Finally, there are several others who want their over-payment applied to next year's retreat. Should I issue a credit memo on their invoice? I've never done that before but I'm sure I can read the manual and figure it out. Can I do that even though the invoice has already been posted? OR...should I just send them a refund check?

Thank-you, John,
Susan

[mbanas]

I went ahead and entered the manual check refund based on another forum post that seemed similar. I posted it like this:

CR: 01-1110-000 (Bank/Checking Account)
DB: 01-4610-000 (Seminar Income)

I hope this is correct. I had a weird "block" in my mind that I had to reference an expense account. But apparently I do not?

Thanks,
Susan

[JohnDMeyers]

Susan:

That will work, as long as you understand that there is no connection between Accounts Payable and Accounts Receivable.

I'm not saying that you're wrong. I just don't want you to go into Accounts Receivable and expect to see anything.

[mbanas]

It sounds like there would have been a better way to do it?

Is a credit memo the correct action to address a refund/overpayment of the retreat for those participants who want their overpayment applied to next year's retreat?

[JohnDMeyers]

Susan:

If you used the Accounts Receivable, and billed $100 and received $100, and posted in AR and fund accounting, there is a way to correct all that, but it is messy, and you already have made several correction entries at this point.

I would not use Accounts Receivable for this function. Accounts Receivable works well if you have something that resembles a business, such as a church school, or rental property. It is a little overkill (in my opinion) for once-in-a-while, or one-time, items such as this.

I would recommend going to Contributions / Setup / Maintain Custom Codes / Contribution Fund Types, and create at least two types, and maybe all of these
1) Tax Deductible
2) Non-Deductible
3) Services Received
4) Registration Fee


and use type 2) or type 4) for things like Retreats

[Zaina]

You can't apply a credit memo to a paid and posted invoice. It still has to be in AR. For the ones that want it applied to next year's retreat, you could create an invoice for next year and apply the memo to that. For example, next year's retreat for $350, $100 memo applied, Balance due = $250. Of course this would sit in AR till the time of the retreat. Just another idea.

[mbanas]

Thank-you, John and Zaina. I think, in this instance, I will create invoices for next year's retreat and apply the credit memos to those invoices.

For future transactions of this nature, I may need to set up the contribution funds as suggested by John. I guess I have assumed that since this income is not tax deductible it HAD to be entered in the AR module through an invoice as opposed to setting up a contribution fund called "non-deductible", etc.

I can't thank you enough for the service you provide through this forum.

Susan