Posted Refund to Misc. Income. How do I credit budget item?

[Mt Olive Church]

I paid insurance from the insurance account. The payment was refunded to us. I deposited it in misc. income. I would like to credit the insurance account for the refund to reduce the expenses to that account. The expense and credit were in different months. How would I do this?

[NeilZ]

I paid insurance from the insurance account. The payment was refunded to us. I deposited it in misc. income. I would like to credit the insurance account for the refund to reduce the expenses to that account. The expense and credit were in different months. How would I do this?

It really isn't income, you had paid this out from income, it was a refund of paid out money.

It may not be a sound accounting transaction, but I just did something like this and Credited the Expense account, and debited the checking account. Deposited it as a separate transaction from other deposits to reflect the refund.

I did a quick search in the Accounting category here using refund as the search term and came up with a few threads that say the same thing.

[LQ Helper]

We too received three separate refunds. One for the current year and two for previous years. I did post the current year to the insurance income account but am not sure what to do with the almost $3,000 for previous years. If I post the entire amount to the current year expense, at the end of the year we will have a credit in insurance expense. 2016 is closed and I cannot post to that year any longer.

My question is: should I post this prior year refund to 01-3110-000 Unrestricted Net Assets?

[NeilZ]

We too received three separate refunds. One for the current year and two for previous years. I did post the current year to the insurance income account but am not sure what to do with the almost $3,000 for previous years. If I post the entire amount to the current year expense, at the end of the year we will have a credit in insurance expense. 2016 is closed and I cannot post to that year any longer.

My question is: should I post this prior year refund to 01-3110-000 Unrestricted Net Assets?

This is one of the reasons we say you should keep 18 months open at one time. If you haven't closed December 2015, you could still post the 2015 refund to that year. However, if you've already done that but have 2016 open, you could post those funds to December 2016, the 2016 refund amount to the 2016 Insurance, and the 2015 to 2016's miscellaneous income (if you have one) with a LONG explanation of why these funds are being added. Then I'd change Powerchurch accounting to have 18 months open.

[LQ Helper]

We too received three separate refunds. One for the current year and two for previous years. I did post the current year to the insurance income account but am not sure what to do with the almost $3,000 for previous years. If I post the entire amount to the current year expense, at the end of the year we will have a credit in insurance expense. 2016 is closed and I cannot post to that year any longer.

My question is: should I post this prior year refund to 01-3110-000 Unrestricted Net Assets?

This is one of the reasons we say you should keep 18 months open at one time. If you haven't closed December 2015, you could still post the 2015 refund to that year. However, if you've already done that but have 2016 open, you could post those funds to December 2016, the 2016 refund amount to the 2016 Insurance, and the 2015 to 2016's miscellaneous income (if you have one) with a LONG explanation of why these funds are being added. Then I'd change Powerchurch accounting to have 18 months open.

The problem with that is our accountant advised us to close the month or quarter after we presented the financials to our group. Any changes should be made in the current period. Especially after the financials have been audited by the accountant.

[NeilZ]

We too received three separate refunds. One for the current year and two for previous years. I did post the current year to the insurance income account but am not sure what to do with the almost $3,000 for previous years. If I post the entire amount to the current year expense, at the end of the year we will have a credit in insurance expense. 2016 is closed and I cannot post to that year any longer.

My question is: should I post this prior year refund to 01-3110-000 Unrestricted Net Assets?

This is one of the reasons we say you should keep 18 months open at one time. If you haven't closed December 2015, you could still post the 2015 refund to that year. However, if you've already done that but have 2016 open, you could post those funds to December 2016, the 2016 refund amount to the 2016 Insurance, and the 2015 to 2016's miscellaneous income (if you have one) with a LONG explanation of why these funds are being added. Then I'd change Powerchurch accounting to have 18 months open.

The problem with that is our accountant advised us to close the month or quarter after we presented the financials to our group. Any changes should be made in the current period. Especially after the financials have been audited by the accountant.

In that case you should talk to your accountant about how to handle this. However, churches run on a cash basis, so this type of situation happens frequently. Closing months or quarters prevents you from making necessary adjustments. Regular businesses work the way your accountant wants you to handle closing months, churches don't.

[LQ Helper]

Thank you, I will.