Income & Expense S/A - Entries posted incorrectly

[oztheguitarman]

31st May, 08

a) We have donated funds to MGF from Jan to Dec 2007 total $ 3500.00
and MGF have issued a tax receipt for $ 3500.00

However the Income & Expense statements shows donation entries for only $ 1500.00

b) I have done a reconcilliation of MGF account and having checked the Journal entries report it appears a total of $ 2000.00 was debited to Ministry Expense account (various amount at different months which total $ 2000)

In order to reverse these entries and to ensure that the Income & Expense Statement account matches the donation tax receipt, can I process the following transactions example of one entry made on 6th February 2007 for $ 370.00 :

Credited Operating A/C 01-1110 $ 250.00

Credited Missions Designated A/C 02-4047 $ 120.00

Debited MGF A/C 02-7300-214 $ 120.00

Debit Ministry Expense A/C 01-5985 $ 250.0

REVERSING ENTRY TO BE MADE AS FOLLOWS :


Debit A/C 01-1110 $ 250.00
Debit A/C 02-4047 $ 120.00
Credit MGF A/C 02-7300-214 $ 120.00
Credit A/C 01-5985 $ 250.00

POST CORRECT ENTRY AS FOLLOWS :

Credit A/C 01-1110 $ 250.00
Credit A/C 02-4047 $ 120.00
Debit A/C 02-7300-214 $ 370.00

Can you please confirm if above transactions are OK

or should I only pass the following entries i.e.

Debit A/C 01-5985 $ 250.00 and
Credit A/C 02-7300-214 $ 250.00

Needless to say I will do all the adjusting entries on the dates that it was incorrectly posted for the month/year.

Thanks for your advice and help as I need to fill up the Tax return form
T3010 for Revenue Canada due by 30th June 08.

Regards

Osvaldo De Souza

[Matt]

The best practice is to reverse the incorrect entry and then reinput it correctly. In looking at the original entry the portion that debited 02-7300-214 and credited 02-4047 for $120.00 is incorrect if a check was actually written for this amount, as the entry did not post to the checking account. If a check was actually written the credit should have been to account 02-1110, not 02-4047. Also, the "correct" entry you have below will cause an out of balance condition in funds 01 and 02 because the debits and credits to each fund do not equal.

Assuming that the $120.00 did in fact get paid out your checking account go ahead and input the reversal entry you show. Then, input the correct entry as follows:

Debit 02-7300-214 $370.00
Credit 02-1110-000 $370.00