Purchase a CD

[Greghc48]

Question….

Our church may elect to use some money from savings to purchase a CD to earn more interest. It’s likely we would buy the CD from another bank with better rates, so we would have to transfer funds from savings to checking, then write the check for the purchase.

I understand how to transfer $ from savings to checking, using transfer accounts, but am a little hazy on other entries.

Assume I would do the following:

Transfer $ from savings to checking using fund accounting entry. ($ are all in our general fund).
Create an expense account to show the check written to the other bank for the CD.
Write the check and deposit in the CD account, then show the new CD as a new asset in our general fund.


Or… would I just use the fund accounting entries to show the transfer of $ from our savings to the new CD….. which would work… but how would I post the check written to the other bank?

I’m a little hazy on this and just need some accounting advice.

Thx!

Greg

[KeithF]

Greg - when you write the check for the CD, CREDIT your checking account and DEBIT the new CD account. No need to hit an expense account.

[Greghc48]

Thank you…. I was hoping it would be simple. I’m only as good an accountant as Powerchurch lets me!!