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Starting in 2005, 10% of our excess income over expense is transferred to a restricted maintenance fund and 40% to a restricted capital fund. In 2006, a new church van was purchased for $26,000. The entry made at that time was -
dr 01-1415-000 Vehicles $26,000
cr 01-1115-000 Cash -$26,000

The Restricted Capital fund should have be debited but I am unsure what all the required entries should be. Any help would be appreciated.

When you originally transferred the money to the restricted capital fund what accounts were debited and credited to post the transfer? Also, are you using restricted equity, income, and release accounts to record this restriction? Is the restricted capital fund in Fund 01 or another fund?

matt wrote:When you originally transferred the money to the restricted capital fund what accounts were debited and credited to post the transfer? Also, are you using restricted equity, income, and release accounts to record this restriction? Is the restricted capital fund in Fund 01 or another fund?

The original entry was to debit 01-3001-000 General Fund account and credit 01-2698-000 the Capital Res Fund.

I assume this Capital fund is a restricted equity account but don't think I understand enough what a restricted income and release account is.

The restricted capital fund account that is set up is actually a liability account, not an equity account. This isn't the recommended way to account for a restriction. However, since it is set up this way the entry you need to input to show that the restriction was used is:

Debit 01-2698-000 $26,000.00
Credit 01-3001-000 $26,000.00