recording expenses correctly

[bsbrown]

We have a family life center fund 02 that the Church 01 shares the electric bill with. The church pays the full bill and then I transfer the amount the center is responsible from that checking account to the church checking account. Since the total expense was recorded when the original check was written, how do I record the portion the center paid. Slightly confused

[NeilZ]

We have a family life center fund 02 that the Church 01 shares the electric bill with. The church pays the full bill and then I transfer the amount the center is responsible from that checking account to the church checking account. Since the total expense was recorded when the original check was written, how do I record the portion the center paid. Slightly confused

So two separate checking accounts. I'm going to assume that you transfer the funds from one checking account to the other via EFT of some sort.

The easiest way of doing this is simply create a manual check made out to the church for the family life center, using the electric expense account.

To record this for the church, since its really not income but a reimbursement, the easiest way would probably be to just enter a deposit transaction in Fund Accounting, debiting the bank where you will deposit the check and crediting the expense account. Just put all the information in the note field of the transaction.

Now if you only had one checking account to cover all the funds, it would be really easy as you'd be able to expense both funds.

[tbcbrown]

transfer via on line banking. two comments?
1 - I thought the pc transfer entry had to be used since there are two separate funds involved.???
2 - don't I have to record the expense for fund 02 since that is where the expense occurred as 01 was reimbursed???

[NeilZ]

transfer via on line banking. two comments?
1 - I thought the pc transfer entry had to be used since there are two separate funds involved.???
2 - don't I have to record the expense for fund 02 since that is where the expense occurred as 01 was reimbursed???

Not if you're doing a reimbursement like this.

1. The manual check from the Family Life Center account will show their checking account (for example: 02-1120-000) as the CREDIT, and the utility expense (ex: 02-5210-000) as the DEBIT

2. For the 01 account you're going to CREDIT the EXPENSE account (02-5210-000) and DEBIT the checking (01-1110-000) in a FA manual deposit transaction. Its not 'new income' its a reimbursement, so you're putting 'funds' back into that budgeted expense item, and back into the church checking.

You could go and create a separate reimbursement income account, etc, etc; but that does not reflect the reimbursement back to the expense account, so it will look like the church is overspending on utilities.

See what I'm saying??

[bjsbrown65]

I do but I have an inquiring mind and always want to know all I can learn to make the job easier. I have already electronically transferred the $ from family life account to church account. I then used the transfer accounts to transfer the $ in power church. Is it appropriate to use the transfer accounts to transfer the expense from church acct to family life account so it won't appear the church paid the expense without reimbursement. If this is not correct procedure, how should it be done. Thanks for your suggestion. Will strongly consider using next month.

[NeilZ]

I do but I have an inquiring mind and always want to know all I can learn to make the job easier. I have already electronically transferred the $ from family life account to church account. I then used the transfer accounts to transfer the $ in power church. Is it appropriate to use the transfer accounts to transfer the expense from church acct to family life account so it won't appear the church paid the expense without reimbursement. If this is not correct procedure, how should it be done. Thanks for your suggestion. Will strongly consider using next month.

If you use the method I described above, it won't appear that the church is paying the expense, as the expense will only be 1/2 of the bill .. it would be even more obvious if when you create the invoice, you show two different lines one showing the church expense amount, and the other the family life expense. When using the transfer accounts you actually lose some audit trail as there's no actual invoice showing that the center paid the bill, all you have is 'funds' flowing in the background.

Try this :

Using the idea of two expense lines on the invoice, create an expense account called "family life utility reimbursement". Then when the utility invoice is entered, you debit the church portion under the normal church utility account, and the church life portion under the "family life utilities" account.

Then, as I said, the family life account writes a manual check for the EFT to the church. It debits its normal utility account and credits its checking account. This reflects the expense properly in the church life fund.

Then you create a transaction for the church fund. It would Credit the expense account and debit the checking account. Thus, your 'reimbursement' account should always have a 0.00 expense balance when the money is 'reimbursed'.

If people then need PROOF that the church is not paying for the family life utility, you can print a Account Activity report that would show the debits and credits to that account.

Now,this may not be a proper accounting way to do this, but you would be accounting for the money that was advanced then paid back.

Another way of doing this would show the payment by the center in the following way:

Create a income account outside of the normal area you use for contributions, etc. Make call it Utility Reimbursement. When the utility bill comes in, the church pays it all.

Then you create an Invoice in Accounts Receivable to the center, for the amount of their portion. You still create a manual check to the church from the center fund. You then create the payment for the invoice and the system will show the payment as income outside of contributions. You have a full audit trail showing the invoice to the center, and the payment. While the church expense account will reflect the total utility bill, the utility reimbursement income account and the AR reports should reflect that the center is paying its share.