Reversing Transactions

[dbrayboy]

Hi, I posted a months worth of contributions and then I posted them in Fund Accounting, only to discover that I had my banking account debiting and crediting itself. At any rate, I tried to reverse the transactions in Fund Accounting but it gave me a message indicating that reversing the transaction in fund accounting would not change it in contributions. So, my question is, if I reverse the transactions in contributions and re post will it automatically change the balances in Fund accounting or do I need to reverse in both funds (1) contributions and then (2) Fund accounting. Furthermore, would I have to reenter each contributor again???

Thanks, Dannie
PS: I hope the question is not to confusing.

[NeilZ]

Hi, I posted a months worth of contributions and then I posted them in Fund Accounting, only to discover that I had my banking account debiting and crediting itself. At any rate, I tried to reverse the transactions in Fund Accounting but it gave me a message indicating that reversing the transaction in fund accounting would not change it in contributions. So, my question is, if I reverse the transactions in contributions and re post will it automatically change the balances in Fund accounting or do I need to reverse in both funds (1) contributions and then (2) Fund accounting. Furthermore, would I have to reenter each contributor again???

Thanks, Dannie
PS: I hope the question is not to confusing.

FWIW .. DO NOT CHANGE ANYTHING IN CONTRIBUTIONS, other than making sure that the Contribution Funds are setup properly. What you're seeing is a warning that is given anytime a transaction is created outside of the Funds Accounting module. It doesn't stop you from reversing the transaction. That said, most transactions should be voided from the module that created it. You'd void a check in Accounts Payable or Payroll, then recreate it there. However, Contributions is somewhat different. Most times the Contributions as entered are fine, you don't need to change those. In this specific case the only issue was the transaction that was created.

1. Go into Contributions -> Setup -> Maintain List of Contribution Funds. Look up the Contribution Fund in question, then go to the Accounting tab, then check to make sure that the Debit account is pointing to the Checking account, and the Credit account is setup to point to an INCOME account, normally a 4000- series account. Check all the funds to make sure that they are setup correctly.

2. Now, back to Funds Accounting. Find the Contributions Transaction in question. Reverse it. Then use it as a template to create a replacement transaction. Use the DEBIT line from the original transaction, as it was correct, but then for the CREDIT line debit the proper INCOME account.

For example, the original transaction had this for the Debit & Credit:

01-1110-000 Checking DB $100.00
01-1110-000 Checking CR $100.00

Enter on the new transaction:

01-1110-000 Checking DB $100.00
01-4010-000 Tithes CR $100.00

If you have other Contribution Funds that were contributed to, do the same thing using the correct income account as setup in your Chart of Account

Does this help ??

[dbrayboy]

The information you provided was very helpful. Thank you so much! If its OK, I have a follow up question for you. You indicated that in the contribution setup and maintain a list of accounts section, I needed to put an income account in the credit field. I understand this concept, but I have a few missions accounts in the income account field (those accounts in the 6000 series) as you know these are expense accounts and I have further established a certain percentage to be taken from the debit account(checking account) and put into the mission account. For example one of entries look like this:

Debt (bank) account 01-1110-000 (The Way)
Credit (income) account 02-6015 (Philippine Church Mission)
"The fund above is to receive 1%
of contribution fund 100

When I printed my Account Activity Report I noticed that all of my mission accounts are credit properly and on the debit side it shows a negative balance. None of these accounts had a beginning balance therefore the negative balance seems appropriate???? When we initially set up the program we didn't put a beginning balance. My question is, "is this proper accounting?" Would you recommend us going back and trying to put a beginning balance for each of these funds? Is it OK, if these accounts show negative for the entire year?

Thank you so much for your time. I really appreciate it.

Dannie

[NeilZ]

The information you provided was very helpful. Thank you so much! If its OK, I have a follow up question for you. You indicated that in the contribution setup and maintain a list of accounts section, I needed to put an income account in the credit field. I understand this concept, but I have a few missions accounts in the income account field (those accounts in the 6000 series) as you know these are expense accounts and I have further established a certain percentage to be taken from the debit account(checking account) and put into the mission account. For example one of entries look like this:

Debt (bank) account 01-1110-000 (The Way)
Credit (income) account 02-6015 (Philippine Church Mission)
"The fund above is to receive 1%
of contribution fund 100

When I printed my Account Activity Report I noticed that all of my mission accounts are credit properly and on the debit side it shows a negative balance. None of these accounts had a beginning balance therefore the negative balance seems appropriate???? When we initially set up the program we didn't put a beginning balance. My question is, "is this proper accounting?" Would you recommend us going back and trying to put a beginning balance for each of these funds? Is it OK, if these accounts show negative for the entire year?

Thank you so much for your time. I really appreciate it.

Dannie

You should NEVER credit an EXPENSE account in this way. The only time you should even think about doing it is if you overpaid on an expense, and you get a refund, or something like that. The reason is that you really didn't spend as much as you originally debited the account for.

You need to create an INCOME account for these missions, since it appears that the funds that are being 'restricted', you should create these as RESTRICTED Income accounts. You then would set the Contribution Funds to these income accounts to have the transfer made. When you then create a check to send to this mission, or pay an expense for this mission, you would DEBIT that 6000- series account for the expense, and RELEASE funds from that Restricted Income account.

Does this help ?

[dbrayboy]

Thanks again, your response shed new light on the situation. I've only posted one month this year (January), so it looks like I have to go back and reverse all my January transactions, to include all contributors to my mission accounts. Sometimes learning is painful

Thanks, again
Dannie