new fund acount ?

[yoknox]

Trying to set a new fund account for construction. Took out construction loan in 12/15; however no draws until 1/16. So have set this up correctly in new fund. Have also used transfer funds example in forum to move construction checking account money to new fund. Here's my ?. The loan was closed in December, 2015 so had to set up a loan closing liability account in fund 01 plus have an loan closing cost expense account. How does this information get to fund 02. Transferred or how. If so, please give specifics. If not, please explain procedure. Thank you.

[NeilZ]

Trying to set a new fund account for construction. Took out construction loan in 12/15; however no draws until 1/16. So have set this up correctly in new fund. Have also used transfer funds example in forum to move construction checking account money to new fund. Here's my ?. The loan was closed in December, 2015 so had to set up a loan closing liability account in fund 01 plus have an loan closing cost expense account. How does this information get to fund 02. Transferred or how. If so, please give specifics. If not, please explain procedure. Thank you.

Um .. you mention a 'construction' checking account. This is a separate checking account that contains the loan funds?

Why not just attach it to the new fund in the first place ??

[yoknox]

the checking account was set up prior to loan approval when there was a donation toward construction and we didn't want to put in general fund. Can you address the questions about the liability acc0unt, etc.

[NeilZ]

the checking account was set up prior to loan approval when there was a donation toward construction and we didn't want to put in general fund. Can you address the questions about the liability acc0unt, etc.

I'm going to assume that all future transactions relating to the construction will be debited/credited in the new fund only.

Assuming fund numbers of operations is 01, and the building is 02, checking account is 1120, liabiilty is 2210, expense is 5200

1. I'd first attach the checking account under the new fund as 02-1120.

2. I'd then transfer the current balance of the account from operations (01-1120) to (02-1120).
CR 01-1120-000 checking $5000
DB 01-9110-000 transfer-out $5000

DB 02-1120-000 checking $5000
CR 02-9210-000 transfer-in $5000

3. Then I'd move the liability

DB 01-2210 liability $2000
CR 01-9110 transfer-out $2000

CR 02-2210 liability $2000
DB 02-9210 transfer-in $2000

4. Then do the expense

CR 01-5200-000 expense $1000
DB 01-9110-000 transfer-out $1000

DB 02-5200-000 checking $1000
CR 02-9210-000 transfer-in $1000

This moves all the funds/liabilities from operations to the new fund, it will automatically take care of the equity accounts since they normally close to the unrestricted net assets (equity) account in each fund.

As always, I recommend that you do a backup of the accounting database using the built-in Powerchurch backup utility so you can restart from scratch in case of error.

[yoknox]

Neil, thank you so much for your help. One question please. what is the significance of the word checking in the following transaction since 5200 is not a checking account.

DB 02-5200-000 checking $1000
CR 02-9210-000 transfer-in $1000

[NeilZ]

Neil, thank you so much for your help. One question please. what is the significance of the word checking in the following transaction since 5200 is not a checking account.

DB 02-5200-000 checking $1000
CR 02-9210-000 transfer-in $1000

My bad, I was cutting and pasting and didn't rename it, the main thing was the 5200, which shows its an expense.

[yoknox]

you are bad but in a good way. Thanks.

[Mark Mediary]

Hi again Neal,

This was a very helpful post, and I am in pretty close to the same situation, with this difference: I want to drain the liabilities from various long past activities and fundraisers that were left over, and now nobody is doing anything with them. 100 dollars here, 450 dollars there, totals about $1000 in six liability accounts. I want to clear the decks and move them all over to a newly established "Pastor's Discretion" fund ( 05 ) from the General Fund ( 02 ). I also will move the total cash amount from our operating checking account to the Pastor's discretionary checking account by writing a check. I have this all set up in the two Accounting Funds' Chart of Accounts, but I am a little overwhelmed by the complexity of the transfer.

Liability
02-2001 Benefit Concert $70
02-2002 Benevolence $164
02-2003 Souper Bowl $146
02-2004 Social Action $485
02-2005 Community Event $ 181
02-2006 Hands Working $ 20

Assets
02-1115 Operating Checking
05-1410 Pastor Discretion Checking

Transfer
02-9050 from 02-to 05
05-9520 to 05 from 02

Let me know what else I need to set up the solution?

Thanks,

Mark

[NeilZ]

Hi again Neal,

This was a very helpful post, and I am in pretty close to the same situation, with this difference: I want to drain the liabilities from various long past activities and fundraisers that were left over, and now nobody is doing anything with them. 100 dollars here, 450 dollars there, totals about $1000 in six liability accounts. I want to clear the decks and move them all over to a newly established "Pastor's Discretion" fund ( 05 ) from the General Fund ( 02 ). I also will move the total cash amount from our operating checking account to the Pastor's discretionary checking account by writing a check. I have this all set up in the two Accounting Funds' Chart of Accounts, but I am a little overwhelmed by the complexity of the transfer.

Since you're going to issue a check to move the funds to the discretionary account, I'm assuming that it has its own banking account. in which case, there is NO need to transfer anything. Just write the check in Accounts Payable, then create a deposit transaction for fund 05. The check should look like this:

02-1115 Checking CR 1066
02-2001 Benefit Concert DB $70
02-2002 Benevolence DB $164
02-2003 Souper Bowl DB $146
02-2004 Social Action DB $485
02-2005 Community Event DB $ 181
02-2006 Hands Working DB $ 20

Deposit to new fund - Transaction in Funds Accounting

05-1410 Pastor Checking DB 1106
05-4210 Income CR 1106


This drains the liability accounts, and deposits the funds into the new checking account, showing the income. In the Note area of both the check and the deposit explain the reason for the check and the deposit.

This does two things:

1. The Check from the 02 account can now be reconciled with the bank statement. You need to clear this from the old fund.
2. The deposit will show up on the new account's bank statement, and it can be reconciled.

You would use transfers if you were using the same checking account for both the 02 and the 05 fund, but you're not so you need to show the check written out of one account, and deposited in to the other.

This help ?

[Mark Mediary]

Much clearer than I was imagining it to be, Neal, yes.

Would it confuse things if the deposit into the 05-1410 checking account was recorded as a liability rather than as income? Because it is absolutely up to his discretion where and when to spend it, I have only set up a single 2000 level account to record outgoing transactions. I don't want to record income or expenses on the fund, in other words, just assets and liabilities for the sake of tracking onto the Balance Sheet.

Mark

[NeilZ]

Much clearer than I was imagining it to be, Neal, yes.

Would it confuse things if the deposit into the 05-1410 checking account was recorded as a liability rather than as income? Because it is absolutely up to his discretion where and when to spend it, I have only set up a single 2000 level account to record outgoing transactions. I don't want to record income or expenses on the fund, in other words, just assets and liabilities for the sake of tracking onto the Balance Sheet.

Mark

Well .. as you know a liability is something that the church is obligated to pay. Is this something the pastor HAS to spend? If not, you may want to rethink this. The only way you know the pastor is spending is when someone writes the check, what kind of checks and balances will you have.

If you feel this is the way to go, then just change the deposit as I listed it to reflect the liability account rather than an income account.

[Mark Mediary]

Well, I'm thinking that I want to avoid calling it 'income' more than anything else. These are internal transfers, and should not impact the P/L anywhere. What I'm after is only to drain the obligations from the Operating Fund and put them into the Discretionary Fund. As I say in the setup, they are stubs and leftovers from past years' accounting that were forgotten and neglected. Rather than zero them out I want to give them someplace to go.

As far as accountability, this new fund is a first step in bringing the DF on to the accounting in the first place. Prior to this, it was not recorded at all in the system. The use of the fund is absolutely and solely at the discretion of the pastor, so as far as oversight the Board is only going to see values going in and out, without any descriptions. This is at their direction to me. (There's also an investment fund with an accompanying Money Market/Checking account, both under the same restrictions.) My concern upon taking over this project was that these funds weren't even being included on the Balance Sheet as assets, so if any auditor from IRS or otherwise asked about them, there was nothing to point to other than past statements (which the former Pastor did not leave behind). The new pastor is passing them on to me for recording, but again without any oversight or review, per the Board. That way at least I have the checks and balances from the statements as a check and balance of the Fund. Sorry for the pun.

Thanks again, Neal. Your attention to this is very much appreciated.

Mark