Adjusting beginning balances in assets

[davidbwood]

In our haste to get Powerchurch up and running for the first of the year the decision was made to enter the original loan (mortgage) amounts as our beginning balances for the church and parsonage fixed assets. I am reasonably certain I need to debit each of the fixed asset account to bring them to the assessed value (the number our elders agreed to use as the property value) but I'm not sure what the offsetting credit entry would be. Also we did not enter an amount for furniture, computer equipment, etc. as we did not have an inventory in place. That inventory will be complete shortly and I assume that the entry for that would be the same. Thank you in advance for your guidance on this

[JohnDMeyers]

A beginning checking account balance transaction looks like this:
DB 01-1110-000 checking $4,600
CR 01-3110-000 unrestricted net assets $4,600

A beginning building asset balance transaction looks like this:
DB 01-1810-000 building asset $100,000
CR 01-3110-000 unrestricted net assets $100,000

A furniture/equipment beginning balance looks like this:
DB 01-1710-000 furniture asset $1,000
CR 01-3110-000 unrestricted net assets $1,000

A mortgage liability beginning balance looks like this:
CR 01-2120-000 mortgage liability $80,000
DB 01-3110-000 unrestricted net assets $80,000

A depreciation beginning balance looks like this:
*note: depreciation will be a negative asset
CR 01-1790-000 depreciation $500*
DB 01-3110-000 unrestricted net assets $500

[JohnDMeyers]

Using my example numbers, your beginning Balance Sheet will look like this:

ASSET
..Checking $4,600
..Furniture/Equipment $1,000
..Depreciation -$500
..Building $100,000

TOTAL ASSETS
..Assets $105,100


LIABILITIES AND EQUITY
LIABILITIES
.. Mortgage $80,000
EQUITY
..Unrestricted Net Assets $25,100

TOTAL LIABILITIES AND EQUITY
..Liabilities and Equity $105,100

[davidbwood]

John - thank you so much. Very simple now that I see it spelled out. I guess I was trying to make it more complicated than it is... stems from not actually "doing" accounting until nearly 30 years after I took those classes in college.

[JohnDMeyers]

From my high school teaching background, I find that one good illustration is easier to grasp than twenty pages of text!

[JMHunter]

I need to change the balance on our Mortgage since we have built another building and added to it. It was 79000 and is now 325000. Can you tell me how to fix this?

Do I need to Cr 01-2120 with the total amount of 325000 and Dr 01-3110?

[NeilZ]

I need to change the balance on our Mortgage since we have built another building and added to it. It was 79000 and is now 325000. Can you tell me how to fix this?

Do I need to Cr 01-2120 with the total amount of 325000 and Dr 01-3110?

I believe its the other way around, but you would only adjust for the difference between the previous loan amount and the new amount unless you paid off the original loan.

I'd take another look at the second message in this thread .. John shows how to create a beginning balance, your addition to the mortgage would follow the same types of transactions, as would the increase in assets.