How to handle a previous internal "loan"?

[Eden Whitehead]

Over a year ago we transferred $2500 from the Restricted Funds bank account to the General Checking bank account as an internal "loan." (The funds are not to be spent from General Checking but to remain there to ensure the balance does not fall below the bank's required minimum balance.)

Technically, the General Checking account has $2500 in it MORE than it should and the Restricted Funds bank account is SHORT $2500.

Up to now I have had to manually enter a notation every month into the financial reports for the Finance Committee. As I am setting up FA in ver10 is there some way I can get one of the reports to automatically show (every month) that General Checking "owes" $2500 and that Restricted Funds is "owed" that amount?

For example, should I (on paper only) "move" the $2500 back where it belongs, then ... do what? Set up a liability? (Both bank accounts are in fund 01.) Or make some kind of direct transaction? A walk-through would be gratefully appreciated! ... Or should I not make any adjustments? But, if not, is there a report that will show the "discrepancy"?

Thanks!

[Jeff]

Here is one way to handle this situation. There may be others, but this is the first way that comes to mind.

You can create a sub-account for the main checking account. ie 01-1110-001 And call it Restriced Loan and put the $2500 in this account. Since the 01-1110-000 and and 01-1110-001 use the same middle four numbers (major account number) the program knows these are one physical bank account and adds their totals together for bank reconciliation and check register reports. When you run a balance sheet, you will see 2 lines for the bank account showing the separate balances.

[Jeff]

Going back to one of your other posts. With this loan, the restricted equity account can't be equal to the restricted checking account, because part of the money is being held in the general checking account.

If you split it out as above, the restricted equity account should equal your restricted checking + this amount in the sub-account of the general checking.

[Eden Whitehead]

You can create a sub-account for the main checking account. ie 01-1110-001 And call it Restriced Loan and put the $2500 in this account.

So my transaction would look like this?

01-1110-000 CR (decrease) $2500
01-1110-001 DB (increase) $2500

(Sorry to be so very basic, but I'm getting a little gun-shy about charging ahead when I think I know what I'm doing only to find I've gotten myself in another fine mess! )

[Jeff]

Correct, that will move the $2,500 into the sub account.

[Eden Whitehead]

Thanks, Jeff. I will set that up right away! (At last, progress is being made in a forward direction! At least, in this one area....)

[Eden Whitehead]

Going back to one of your other posts. With this loan, the restricted equity account can't be equal to the restricted checking account, because part of the money is being held in the general checking account.

If you split it out as above, the restricted equity account should equal your restricted checking + this amount in the sub-account of the general checking.

I'm still muddling through this!

Jeff, I followed your recommendation/instructions for setting up the -001 account for the "loan" and that is fine. But in reference to the associated equity accounts, since the "loan" was made *before* I set up PC+, the beginning balances I entered for the asset accounts during the initial setup reflected the $2500 as already being in the main checking account; PC+ had no knowledge of the earlier "loan" transaction which means the beginning balances in the unrestricted and restricted equity accounts are off by the amount of the loan (as you noted).

If I follow your previous post correctly, the balance of the unrestricted equity account 01-3110 should be $2500 less than the combined main checking asset balances (01-1110-000 and 01-1110-001); and the balance of the restricted equity account 01-3240 should be $2500 greater than the restricted asset balance (01-1240).

For example (using round numbers to make it easier for me )

If 1110-000 and 1110-001 have a combined total of $5,000.00, then
3110-000 should be $2500.00.

And if 1240-000 has a balance of $7,500.00, then
3240-000 should be $10,000

Is this right?

Can I adjust the equity balances by simply entering a transaction such as:

01-3110 DB $2500.00
01-3240 CR $2500.00

Or am I backwards -- or totally off-track -- on how to handle this?

Thanks once again....

[Jeff]

I think you have it. The transaction you listed will correct the balances in the equity accounts.