Closing a FUND

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Parks&Recs2022
Posts: 2
Joined: Sun Aug 14, 2022 9:35 pm

Closing a FUND

Post by Parks&Recs2022 »

Our church used to have a preschool that then closed, the bookkeeper had used a different FUND for the preschool books, but we’d like to clear the balances on those accounts now that the preschool has been closed for several years. The cash-based accounting is throwing me off, and I need some confirmation on how to clear the balances and completely inactivate the FUND for the preschool.

Here is an example of the account balances left for the preschool:
04-1101 Cash = debit ($5,000)
04-3001 Owners Equity = credit ($5,000)

I think the entries needed are the following:
04-3001 Owners Equity, debit $5,000
04-1101 Cash, credit $5,000

Then move the balances of those accounts to the main FUND for the church:
01-1101 Cash, debit $5,000
01-3001 Owners Equity, credit $5,000

Is this correct? Can someone be kind enough to confirm or point me in the right direction?
Thank you!
ES

NeilZ
Posts: 9836
Joined: Wed Oct 08, 2003 1:20 am
Location: Monett MO
Contact:

Re: Closing a FUND

Post by NeilZ »

Parks&Recs2022 wrote:
Mon Oct 03, 2022 10:54 pm
Our church used to have a preschool that then closed, the bookkeeper had used a different FUND for the preschool books, but we’d like to clear the balances on those accounts now that the preschool has been closed for several years. The cash-based accounting is throwing me off, and I need some confirmation on how to clear the balances and completely inactivate the FUND for the preschool.

Here is an example of the account balances left for the preschool:
04-1101 Cash = debit ($5,000)
04-3001 Owners Equity = credit ($5,000)

I think the entries needed are the following:
04-3001 Owners Equity, debit $5,000
04-1101 Cash, credit $5,000

Then move the balances of those accounts to the main FUND for the church:
01-1101 Cash, debit $5,000
01-3001 Owners Equity, credit $5,000

Is this correct? Can someone be kind enough to confirm or point me in the right direction?
Thank you!
ES
OK ... 04-3001 is a Net Asset or Fund Balance account, basically it tracks all the assets of the fund. I'm going to assume that there's only one checking account (asset) for the preschool, so the Fund Balance should equal the amount in the checking account.

However, I can't go any further without knowing if there are any liabilities showing a balance in the fund. Are there any? The reason for this is the basic accounting equation: Assets - Liabilities = NetAssets. If there are any positive balances in liabilities, those funds are also included in the checking account, which changes the equation to Assets = Liabilities + NetAssets You have to move the liabilities to the Fund Balance account to clear out the checking. You can find all this out by running a Fund Balance report against that fund.

If you show no liabilities at all, the easiest way to clear out the fund is to write a check and expense an account. Nothing says you can't create an expense account called 04-6000-000 (number is just an example) Preschool Fund Closing Expense, then write the check looking like this;

04-1101-000 Checking CREDIT $5000.00
04-6000-000 Preschool Fund Closing Expense DEBIT $5000.00

However, since you're using the same Account number (1101-000) for Fund 01 and Fund 04, I'm going to assume you have one checking account. In this case you would use a TRANSFER account to move the funds. I'm going to use an example found in the Powerchurch Online Help under the topic "Working With Transfer Accounts"; this can also be found in the User Manual. If you don't have Transfer Accounts enabled, follow the directions in the User Manual.

First you need to have transfer accounts setup. Again, I'm not going to assume you have these account setup already, if not, create them using the Simple Setup as shown in the manual:

Simple setup. In a simple setup, you have a pair of Transfer accounts, one for Transfer In and one for Transfer Out. The numbers would be assigned similar to the following and would be used in all Accounting Funds:

Code: Select all

9100-000  Transfer to Other Funds     Used in all funds 
9200-000  Transfer from Other Funds Used in all funds
Then all you need to do to move the funds is do this: (again from the User Manual)

Code: Select all

In the following example, $750 is transferred from the 01 fund checking account into the 02 fund checking account using the simple transfer setup.
 
Account             Description                   Debit           Credit
01-1110-000        Checking Account                               750.00
01-9100-000        Transfer to Other Funds       750.00 
02-1110-000        Checking Account              750.00 
02-9200-000        Transfer from Other Funds                      750.00
 
You should not need to use the 3000 level Fund Balance or Net Asset account in any transaction here. The system will update the Fund Balance accounts automatically.

I would review the User Manual's section on Working With Transfer Accounts before starting, and also do a Powerchurch backup of the Accounting files so you can revert back to the beginning if you don't see what you're expecting.

I don't know what version of Powerchurch you're using, but since v11.5 there is a PDF copy of the User Manual found in the X:\ Powerchurch\PCPLUSxx directory, where "X" is the drive PCPlus is installed on, and 'xx" is the version.
Neil Zampella

Using PC+ since 1999.

Parks&Recs2022
Posts: 2
Joined: Sun Aug 14, 2022 9:35 pm

Re: Closing a FUND

Post by Parks&Recs2022 »

Thanks, Neil; I appreciate your reply and have a few clarifying answers for you.
The bookkeeper used the church account for the preschool, so the preschool & the church bank account were one and the same.
When I run the accounting report, Account Activity, to view the fund balances, the only accounts that have balances left on them are the cash account (04-1101) & Owners Equity (04-3001). The 04 fund was used for the Preschool.
In reviewing your comments on the Transfer account, I think this may make the most sense for zeroing out fund 04 for the preschool. I will ask our bookkeeper if he knows if transfer accounts are enabled and review the User manual. Thank you very much for your assistance!
Best,
ES

NeilZ
Posts: 9836
Joined: Wed Oct 08, 2003 1:20 am
Location: Monett MO
Contact:

Re: Closing a FUND

Post by NeilZ »

Parks&Recs2022 wrote:
Wed Oct 05, 2022 5:44 pm
Thanks, Neil; I appreciate your reply and have a few clarifying answers for you.
The bookkeeper used the church account for the preschool, so the preschool & the church bank account were one and the same.
When I run the accounting report, Account Activity, to view the fund balances, the only accounts that have balances left on them are the cash account (04-1101) & Owners Equity (04-3001). The 04 fund was used for the Preschool.
In reviewing your comments on the Transfer account, I think this may make the most sense for zeroing out fund 04 for the preschool. I will ask our bookkeeper if he knows if transfer accounts are enabled and review the User manual. Thank you very much for your assistance!
Best,
ES
Great ... same checking account makes it much easier. Remember there's no need to touch the equity (Fund Balance) account, just move from the checking, and the system will properly update after the transactions are posted.

Also, do a Powerchurch backup of the accounting files so you can revert if something doesn't appear right.
Neil Zampella

Using PC+ since 1999.

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