Account Payable Posted incorrectly

[FirstMOBC]

Hello
We have an error that is reporting on a 1099. Item is posted but need to be corrected. I think I should correct in A/P since it was booked to the wrong account and check as 1099. Please tell me what you think.

[NeilZ]

Hello
We have an error that is reporting on a 1099. Item is posted but need to be corrected. I think I should correct in A/P since it was booked to the wrong account and check as 1099. Please tell me what you think.

Yes .. void the original check in AP, then create a manual check to the same vendor, for the same date, and using the same check number, but the correct accounts. The voided check transaction will correct the accounts in Funds Accounting, and the manual check will then debit/credit the proper accounts when you post AP.

[LizAA]

Does this also work for restricted accounts? I processed a bill via A/P, that was supposed to come out of a restricted account. I mistakenly took it out of the 'income' account (4200's) as opposed to the 'expense' account (4800's). I've already posted it in Fund Accounting...

[NeilZ]

Does this also work for restricted accounts? I processed a bill via A/P, that was supposed to come out of a restricted account. I mistakenly took it out of the 'income' account (4200's) as opposed to the 'expense' account (4800's). I've already posted it in Fund Accounting...

FWIW ... I have no idea what you mean by 'taking it out' of the 'income' account. If you're manually 'releasing' funds from a restricted account, you're doing it wrong.

Read up about Donor Restricted accounts, which starts on page 216 of the manual. Each Restricted account should have an equity, income and release account to use. You 'can' use existing accounts for all of these, but most create new accounts.

When you create an invoice or manual check in A/P, you would RELEASE the restricted funds by clicking on the Release Restricted Funds button at the bottom of the create invoice or manual check screen. You would then select the particular donor restriction from the list, and then enter the amount being released. The system would then insert the proper temp restricted income and release accounts into the invoice or manual check.

From the way it sounds, you entered an account number manually. There are many ways to fix this, but the only correct way is to VOID the check in A/P, then reissue the check by creating a Manual Check using the same information from the original check as far as vendor, amount, etc. Enter the voided check NUMBER as the number on the manual check, and then clicking on the Release Restricted Funds button to select the proper temp restricted account.

The reason I said that this would be the only 'correct' way, is that this provides a complete audit trail of all actions. What I usually do is enter additional data on the voided check found in the Manual Checks list about why this was voided, as well as the same explanation on the replacement check.


Does this help ??

[LizAA]

Yes, there were three funds set up: the Equity (3210), Income (4210) and Release (4810) funds. (Both 4210 and 4810 close out to 3210 and both say 'income' in the maintain chart of accounts)
I will have to check but I don't recall seeing the option to 'release restricted funds' button when creating an invoice, even though the screenshot in the manual says there should be one... I'll check again when next I am in PCh. Does the 'release restricted funds' button only display under certain circumstances?
I'll check the manual again and work through a transaction to see what happens.

The transaction was: We bought a fridge from Lowes for the church kitchen. The amounts is to be taken out of the Facilities fund which is a restricted fund. I created an invoice with the vendor being Lowes. The credit account is our checking account, the debit account I entered (manually typed) to be the 01-4210 account but I think it should have been 01-4810. ... Then I processed the computer generated check.
When I did the activity report for the Facilities Fund, I get the 3210 balance correct, but the 4210 fund has contributions AND the check with a -ve amt; and the 4810 fund has no transactions.

[NeilZ]

Yes, there were three funds set up: the Equity (3210), Income (4210) and Release (4810) funds. (Both 4210 and 4810 close out to 3210 and both say 'income' in the maintain chart of accounts)
I will have to check but I don't recall seeing the option to 'release restricted funds' button when creating an invoice, even though the screenshot in the manual says there should be one... I'll check again when next I am in PCh. Does the 'release restricted funds' button only display under certain circumstances?
I'll check the manual again and work through a transaction to see what happens.

That button is there all the time. I believe its there even if you don't have any Donor Restrictions setup, if you click it, you'd get an message about no restrictions setup.

FWIW .. I may have missed it somewhere, what version of Powerchurch are you using?

The transaction was: We bought a fridge from Lowes for the church kitchen. The amounts is to be taken out of the Facilities fund which is a restricted fund. I created an invoice with the vendor being Lowes. The credit account is our checking account, the debit account I entered (manually typed) to be the 01-4210 account but I think it should have been 01-4810. ... Then I processed the computer generated check.
When I did the activity report for the Facilities Fund, I get the 3210 balance correct, but the 4210 fund has contributions AND the check with a -ve amt; and the 4810 fund has no transactions.

Yeah .. because the 4210-00 is in the default range for a Temporary Restricted Income account, and 4810 is the release account. HOWEVER that is not the way you create an invoice, then release restricted funds.

A proper invoice would look something like this:


Note ... you have the checking account (1110-000) being Credited, the expense account (5525-000) being Debited, the two other accounts are added when you click the Use Restricted Funds button, and select the proper Restricted Fund.

So the 01-4814-000 account is the Temporary Restricted Release account, yes its under the INCOME numeric series, its not the main INCOME account however, that's the 4214-000 account which is NOT touched. This 4814 account is DEBITed, and the 01-4999-000 is credited. The 4999-000 account is the default Release from Restriction account which closes to the 01-3110-000 account which is the main Unrestricted Net Assets Fund Balance (Equity) account for the Accounting Fund. The 01-4814-000 account closes to the Fund Balance account (01-3214-000) for the restricted fund.

I had a hard time figuring out what this all did until I realized the logic behind it.

1. 1110-000 - checking account .. used to pay for items - a CR entry (which actually subtracts from the account) - decreases the bank balance (a DB entry to this account ADDs funds) -
2. 5525-000 - expense account .. used to show an expense - a DB entry (which adds to the account) - increases the expenses to the church - which you want to show as you need to know how much the church is spending. Normally closes to the 3110-000 Unrestricted Net Assets fund balance account.
3. 4814-000 - temp release account .. DB entry (which subtracts from the account) this actually creates a NEGATIVE entry in the account, which because it closes to the Restricted Fund's fund balance account REDUCES the amount left in the fund balance.
4. 4999-000 - released from restriction account .. a CR entry (which creates a POSITIVE entry in the account) which closes to the main 3110-000 Unrestricted Net Assets fund balance account.

Once you post, and you run an Income & Expense report, you'll see something like this:



Which you'll see cancel out.

Does this help?

[LizAA]

OK. Thanks Neil.
Just reading through this quickly, it sounds like our Chart of Accounts may not have been set up correctly?? Sounds like I may have a bunchof housecleaning to do.....
Our bookkeeper left about a month ago and I offered to help out - I get to learn something new, literally every day!! I have no accounting background and never used PowerCh before.... so input from this forum and the Manual are very much a lifeline right now!!

I appreciate your helps and suggestions.

[NeilZ]

OK. Thanks Neil.
Just reading through this quickly, it sounds like our Chart of Accounts may not have been set up correctly?? Sounds like I may have a bunchof housecleaning to do.....
Our bookkeeper left about a month ago and I offered to help out - I get to learn something new, literally every day!! I have no accounting background and never used PowerCh before.... so input from this forum and the Manual are very much a lifeline right now!!

I appreciate your helps and suggestions.

Yep it does sound like the COA was not used properly. My advice, have your Finance Committee purchase a good reference book like this one:

http://store.churchlawtodaystore.com/churchfinance.html

[LizAA]

We are using PowerChurcch Plus 11.
So the manual says when I am entering an invoice that the 'Maintain Open Invoices' screen should display a "Release Restricted Funds" button to click if this is a restricted fund (Step 4 on page 245) .... when I looked today, I don't see a button like that on the Open Invoice screen...

[NeilZ]

We are using PowerChurcch Plus 11.
So the manual says when I am entering an invoice that the 'Maintain Open Invoices' screen should display a "Release Restricted Funds" button to click if this is a restricted fund (Step 4 on page 245) .... when I looked today, I don't see a button like that on the Open Invoice screen...

That feature's been there since v10.4 I believe.

I may have been mistaken to believe that it's there all the time. Check to see if you have ANY Restricted Funds setup on your system, by going into Accounting -> Funds Accounting -> Setup -> Maintain List of Restricted Funds If you don't see anything there, then that's the reason.

Your previous bookkeeper DID NOT use the system to create those restricted fund accounts, but did it manually, which really is not the way to do it.

[LizAA]

I've just found that in the Accounting Setup Options the "donor Restricted Release Accounts" check box was NOT selected....
THAT's probably why I haven't been seeing the "release from restricted funds" button on the maintain open invoices & transaction screens...
I'm wondering IF I now go and select that option in the Setup, what will it do with all the current temporarily restricted accounts that we have been using in the past?

Liz

[NeilZ]

I've just found that in the Accounting Setup Options the "donor Restricted Release Accounts" check box was NOT selected....
THAT's probably why I haven't been seeing the "release from restricted funds" button on the maintain open invoices & transaction screens...
I'm wondering IF I now go and select that option in the Setup, what will it do with all the current temporarily restricted accounts that we have been using in the past?

Liz

Well .. if they're not setup in the "list of donor restrictions' absolutely nothing.