Unauthorized withdrawal of funds

[Eden Whitehead]

Back in May someone (as yet unidentified) apparently paid their utility bill by phone, using the church's checking account routing/account numbers. It showed up on the bank statement as a withdrawal.

Although the utility company has said they would notify the bank to credit the withdrawal back to the checking account, that has not yet been done.

In the meantime, I did not enter the withdrawal in PC+. Consequently, the bank statements have failed to reconcile by that amount every month since then. I have made a written notation on each reconciliation report explaining the reason the statement did not reconcile.

Now that it is time to close the fiscal year I think I should make some kind of entry in PC+ to cover this circumstance but I'm stumped as to what to do.

Checking account 01-1110
Utility expense account 01-5401
Amount of unauthorized withdrawal $300.49

I have not yet closed fund accounting for May.

When/if the utility company gets around to correcting the church's checking account, what kind of entry would I make at that time? Or simply reverse the one I make now (assuming I have not closed fund accounting for the month I post it to)?

Guidance would be greatly appreciated!

Eden

[Matt]

I would set up an accounts receivable account for this. Then, post an entry in Fund Accounting as follows:

Debit accounts receivable $300.49
Credit checking account $300.49

This way you don't lose sight that you're owed the money. Once the refund comes in post the following entry to clear the receivable:

Debit checking account $300.49
Credit accounts receivable $300.49

[Eden Whitehead]

I would set up an accounts receivable account for this. Then, post an entry in Fund Accounting as follows:

Debit accounts receivable $300.49
Credit checking account $300.49

This way you don't lose sight that you're owed the money. Once the refund comes in post the following entry to clear the receivable:

Debit checking account $300.49
Credit accounts receivable $300.49

Thanks, Matt, for your response.

I've not worked with accounts receivable before. Do you mean that I should do some activity in the Accounts Receivable module? Or do you mean that I should set up an expense account (e.g., 5401-001 Utility Accounts Receivable) in the Chart of Accounts?

(The expense account for the utility in question is 01-5401-000.)

Then my transaction in Fund Accounting would look like this:

CR 1110-000 $300.49
DB 5401-001 $300.49

Hmmm, on second thought.... Would I want to set up an asset account?
For example, add asset account 01-1199-000 to Chart of Accounts for Receivables?

Then
CR 1110-000 $300.49
DB 1199-000 $300.49

Is either of the above correct?

Eden

[Matt]

Your second entry--Debit 1199-000 and Credit 1110-000--is the entry you want to post. Post this entry in Fund Accounting using Enter Transactions. I do not recommend using the Accounts Receivable module in this circumstance, as this is not a case where the church needs to prepare and send out a bill to a customer.

[Eden Whitehead]

THANK YOU, Matt!!

What a blessing you continue to be!

May the Lord prosper the work of your hands to His glory!

Eden

[Eden Whitehead]

The unauthorized payment item from May 2008 has still not been cleared up and, to my knowledge, no follow-up is being done (by bank, utility company, law enforcement).

I set up the asset account for this item as Matt suggested.

How long do I keep something like this on the books?

When it does come time to clear it off, what transaction do I enter to take care of it?

(I honestly don't expect the church to ever recover this money.... )

Thanks,
Eden