Liability Account Balance Error & Fund Balance Question

[SheilahH]

The error that I need to correct took place 3 years ago, however, due to the fact that I do not run a balance sheet on a regular basis (we have a custom report that the board prefers), I did not find it until now. We are needing to refinance our mortgage and have to supply specific reports to the lender.

Part of the problem here is that I do not remember why I did exactly what I did. Looking back, I'm fairly certain it was not a correct method.

When processing payroll, a liability account for the pastor's cell phone was debited and credited for the same amount. This was fine and resulted in a zero balance. When setting up the youth pastor at a later date, I neglected to make the credit entry and therefore, debited the liability account only resulting in a negative balance. How do I get rid of the negative balance? I know that I have seen information about using the Fund Balance (3001) in correcting an entry before, but not sure when this is appropriate. Also, it brings up the second major issue I am having. What does the Fund Balance (on the balance sheet) reflect? Mine seems to me that it is totally out of whack!

I am using version 11.1 on Windows 8. I have been using PowerChurch for a lot of years and felt that I knew what I was doing, however, not feeling that way so much now. Please help.

[Matt]

If the error that is causing the negative balance in the liability account occurred 3 years ago, then I would make the following entry to correct:

Debit Fund Balance (3001)
Credit Liability

In this situation this entry is appropriate because the original problem occurred more than one year ago. As such, this would be considered a prior year adjustment.

Regarding your question on what the Fund Balance on the Balance Sheet reflects--this is simply the difference between your total assets and your total liabilities. If the amount looks totally out of whack then there must be a problem with the current balances recorded for one or more of your asset and/or liability accounts.

[SheilahH]

Thanks for the help on the liability account. I went ahead and did that.

Understanding how the fund balance is calculated helped a lot too. It is not "out of whack" as far as I thought. I ran a balance sheet for the first year that I used the program and I am off the same amount then as now ($3,640.01). Should I be concerned? and if so, how would I go about finding the error and fixing it?

Thanks.
Sheilah

[JohnDMeyers]

Just to chime in here, I want to be sure I understand what is "out of whack".

Your Total Assets should match your Total Liabilities and Net Assets (that will be the last number at the bottom of the balance sheet report).

If these two numbers do not match, my first question would be, "are you using more than one fund"?

If so, there may be another fund that is also off by the same amount. If not, you may have to make a "one-sided" transaction to correct it.

[Matt]

Since your fund balance account is 3001 it appears that you upgraded from a version prior to Version 9 at some point. If so, the earlier versions of PowerChurch allowed you to make one-sided entries. This may be the cause of the difference.

To correct, you'll need to make a one sided entry to the Fund Balance account. Normally, PowerChurch won't let you input a one-sided entry. But if you use a reference number that starts with "OOB" (for "Out Of Balance") the system will let you input one.

[SheilahH]

Thank you so much for the help.

Sheilah