Transfer of monies

[whfpc]

Let's see if I can explain this, We have an account 02-1264 that is an investment account. Session has decided that June of each year we take 5% of the balance of this account and transfer it to property replacement 02-4314. When I run an activity report on each account I see conflicting procedures. Would I just need to transfer said amount between the fund balances on each or would this be a transaction crediting 02-1264 and debiting 02-4314? In 2016 it appears the fund balance was credited for the property replacement account and debited the fund balance from the investment account.

I hope that explains it properly.

Robin

[NeilZ]

Let's see if I can explain this, We have an account 02-1264 that is an investment account. Session has decided that June of each year we take 5% of the balance of this account and transfer it to property replacement 02-4314. When I run an activity report on each account I see conflicting procedures. Would I just need to transfer said amount between the fund balances on each or would this be a transaction crediting 02-1264 and debiting 02-4314? In 2016 it appears the fund balance was credited for the property replacement account and debited the fund balance from the investment account.

I hope that explains it properly.

Robin

Robin,

Session is trying to show a withdrawal from the investment account as income. I'm not sure you can show it as income, as you would have had to reflect any unrealized gains/losses in that account already, and the funds were already listed as income before they were invested. You can't claim funds as income if you already have it available.

In reality, you are NOT transferring funds where you can just debit/credit I'm assuming since you called it an 'investment account' that is a mutual fund of some type. Here's the process I'm assuming you have to go through:

1. Ask for a redemption of 5% of the investment from the investment company. You will receive this (more than likely) as a check.
2. In Powerchurch, when you receive the check you will show a CR on the Investment account, and a DB in checking where you will deposit. Now the CR on the investment account may require two separate entries, one CR against the unrealized gains/loss account to basically clear out those gains, and any additional funds needed from a CR to the investment account itself.

Basically I'm going to assume the following: 02-1264 (main investment account) 02-1265 (unrealized gains/losses). The 1265 account has 1000.00, and the 1264 has 45000 totaling 46000 as seen in the investment company statement.

You want to move 5% of that amount, that's $2300 ... the transaction will look like this:

02-1265 CR 1000.00 -- this clears the unrealized gains/losses
02-1264 CR 1300.00 -- pulls the rest of the funds from the main investment - you get a check for 2300, and the company then shows a balance of 43700.

Here's where it gets interesting .. the next line is
02-1110 DB 2300.00 -- Checking - you create a deposit slip, and drop it and the check at the bank.

Now I'm going to assume that 02-4314 is tied to a Temp Restricted Fund Balance account - I'll use 02-3314 as the number. You want to temp restrict the 2300.00 and only release it when you buy some replacement property .. (not sure what this is but I'm going with your terminology).

Ether add the next two lines on the current transaction or create a new one. I'd create a new one as its easier to correct, and provides a good audit trail. You need to move the funds from where its currently located .. which is the unrestricted fund balance (normally 02-3110) to the temp restriction.

02-3110 DB 2300.00
02-3314 CR 2300.00

This puts the funds in the temp restricted account. I'm also assuming that this temp restriction was setup using the Maintain List of Donor Restrictions function in Funds Accounting.

OK .. did I confuse you on this ??

Disclaimer: I am not an accountant, just have had over 20 years of using the program. I urge everyone that before they try any recommendations they do a backup of the Accounting files using the PCPlus backup utility so they can revert in case something does not look correct.

[whfpc]

yep, confused. The 1264 account is where the JE shows to debit the account and then to credit it to a 02-4332-332 projects income account. The transfer looks like it is between the FB 3332 and 3246 accounts. I will talk to our treasurer and see if he knows why it is this way. It is noted as a gain but no check was received it was taken directly from the quarterly statement, in the same way when they had a loss it was used as an expense. Unless I am reading it all incorrectly..........

Robin

[NeilZ]

yep, confused. The 1264 account is where the JE shows to debit the account and then to credit it to a 02-4332-332 projects income account. The transfer looks like it is between the FB 3332 and 3246 accounts. I will talk to our treasurer and see if he knows why it is this way. It is noted as a gain but no check was received it was taken directly from the quarterly statement, in the same way when they had a loss it was used as an expense. Unless I am reading it all incorrectly..........

Robin

What you see from the investment is UNREALIZED GAIN .. this is an increase in value of an investment where you really do not see actual income. You should be showing this type of investment gain as shown below.

Code: Select all

Here's how we do it:

If the investment is in 01-1310-000, then ADD
01-1312-000 Unrealized Gain (loss) - (detail asset, level 5)
01-3115-000 Unrealized Gain (loss) - (detail fund balance,level 5)

Assume a balance of $12,000 in 01-1310-000 and a market adjustment of $780.00 for a given month:
DB 01-1312-000 $780.00
CR 01-3115-000 $780.00

If the amount is a loss, simply reverse the DB and CR on the above accounts.

You see, you should be accounting for any gains in value in this manner. When you move funds you would do it in the way I mentioned below.

Your confusion is thinking that the increase in value of the investment is actual INCOME, it is not. It is an unrealized gain that you should already be accounting for as I show above.