Entering Sale of Land

Fund Accounting, Accounts Payable, Accounts Receivable, Payroll

Entering Sale of Land

Postby Turning Point » Wed Sep 18, 2019 1:28 pm

We recently sold some land and I want to make sure I enter it correctly.

Some of the proceeds were used to pay off our mortgage and some to fees, etc. We received the balance of the proceeds.

How do I show the mortgage paid off since that money never technically came into the church?

Also, the money we did receive has been put into a new money market fund which I also need to set up.

Thanks for your help.

Lisa
Turning Point
 
Posts: 25
Joined: Wed Feb 08, 2017 4:54 pm

Re: Entering Sale of Land

Postby NeilZ » Wed Sep 18, 2019 8:38 pm

Turning Point wrote:We recently sold some land and I want to make sure I enter it correctly.

Some of the proceeds were used to pay off our mortgage and some to fees, etc. We received the balance of the proceeds.

How do I show the mortgage paid off since that money never technically came into the church?

Also, the money we did receive has been put into a new money market fund which I also need to set up.

Thanks for your help.

Lisa


First .. some questions:

1. How is the mortgage currently tracked in Powerchurch.
2. Is this money market account going to be located under the Operations accounting fund, or another accounting fund?

Neil Zampella

Using PC+ since 1999.
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Re: Entering Sale of Land

Postby Turning Point » Thu Sep 19, 2019 1:27 pm

This is how I've been entering our mortgage payments, it was set up by the previous bookkeeper.

CR 01-1110-000
DB 01-2620-000 Mortgage principal
DB 01-5610-000 Mortgage Interest

I'm wondering if I should show the entire sale amount coming in and then showing all the disbursements that were made?

The money market fund I was going to make a new account, 01-1230-000 which would put it under 01-1200-000 SAVINGS ACCOUNTS.
Turning Point
 
Posts: 25
Joined: Wed Feb 08, 2017 4:54 pm

Re: Entering Sale of Land

Postby NeilZ » Thu Sep 19, 2019 2:39 pm

Turning Point wrote:This is how I've been entering our mortgage payments, it was set up by the previous bookkeeper.

CR 01-1110-000
DB 01-2620-000 Mortgage principal
DB 01-5610-000 Mortgage Interest

I'm wondering if I should show the entire sale amount coming in and then showing all the disbursements that were made?

The money market fund I was going to make a new account, 01-1230-000 which would put it under 01-1200-000 SAVINGS ACCOUNTS.


FWIW .. you should have also shown the land as an asset in the system, if not do the following (taken from another thread on the same subject: "to add it (assuming it has been owned for more than 1 year) DB Building Asset and CR Equity 01-3110-000".

This gives you a starting point to show the income the church derived from the sale. You will probably need to create the Building Asset account under the Fixed Assets header (if you have one) if not, no matter, just use the 1500 series of numbers, IE 1510.
Once the account is created enter the following transaction assuming you received 25000.00 on the sale in Funds Accounting:

01-3110-000 CR 25000.00
01-1510-000 DB 25000.00

If you already have this land listed as an asset, just use that account, but adjust it for the actual amount received for the land.

Now all other transactions are based from this start. Now in a new transaction do the following, assuming the mortgage balance is 13000.00, and fees were 1000.00. Use the date the funds were received, distributed, and deposited in the MM.

01-1510-000 CR 25000.00
01-2620-000 DB 13000.00 (pays off mortgage and clears the liability)
01-5610-000 DB 1000.00 (Takes care of fees, interest, early payment penalty, etc)
01-1230-000 DB 11000.00 (deposit to Money Market the remainder. This transaction should show up in the bank reconciliation for this account)

As usual, I strongly advise a backup of the accounting files using the Powerchurch backup utility so you can roll the changes back if there appears to be a problem. To verify that everything is correct, you should see ZERO in the mortgage liability, an increase of 1000 in the interest expense, and 11000 as the balance in the new MM account. You can also verify that it will appear in the reconciliation by doing a reconcile on the 1230-000 account, using the actual amount deposited there as the new balance and a date after the MM deposit. The reconciliation screen should show that amount as a deposit. Then click on the POSTPONE button.

Let us know how it turns out.

(Standard disclaimer: I am not an accountant, just someone who has used Powerchurch for over 20 years. I always suggest checking with an accountant in your congregation if you are not sure about these suggestions.)

Neil Zampella

Using PC+ since 1999.
NeilZ
 
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Re: Entering Sale of Land

Postby Turning Point » Thu Sep 19, 2019 4:31 pm

Perfect!!

Thank you so much!

Lisa
Turning Point
 
Posts: 25
Joined: Wed Feb 08, 2017 4:54 pm