Proper accounting for 'trust' ? money

[NancySager]

We 'held' approx 25K over the year for 10 individuals assigned to a missions trip - the money was given to us to hold and then to pay the plane/hotel expenses - each person having to pay their own way. I entered the money as it was saved and collected over 8 months into a designated fund income account and deposited into our general fund (we only have one bank account). The plane fare was paid from an expense account. The problem now is our consolidated income and expense reports are inflated by this amount which this isn't really income or expenses to the church. What would be the proper accounting procedure for handling funds like this... such as trust funds I'd really like to get this figure out of our income/expense report. Any ideas welcome! Thanks.

[jeffkoke]

Nancy,

Like you, we use a separate fund (04) for missions income and expenses. Our contribution (income) funds for missions point to fund 04 and therefore does not get confused with our operating income monies (in fund 01).

Was the plane fare paid out of your missions fund? If not, you could have some confusion here.

If you run a consolidated report, it should show all funds together.

Make sense?

Jeff

[Randy B]

I work in government and I really see nothing wrong with the way you handled your situation. In order to get it out of our income and expenses, you could set up a fidiciary fund which is money held in the capacity of a trust or agent. These types of funds only have assets and liabilities. When money comes in you would credit a liability account instead of revenue account. When you disburse the money, you would debit or lower the liability account. You could make this fund the very last fund number and then when you do consolidated reports, you could pull it out and show the fidicuary fund separately like government entities. I would use the subaccount feature to account for your cash which allows you to have one bank account.

[NancySager]

Thanks Jeff & Randy - I think the fidiciary account is just what I need to straighten things out. I'm going to make the entries to transfer the funds to/from the liability account. Thanks!