Sales of Christmas Poinsettias

[Greghc48]

Our church sells poinsettias each year at Christmas for members to purchase in honor of / memory of loved ones. After they are displayed in the sanctuary, they are then taken home by those who purchased them. Based on that approach, we do not give donor credit for the income received.

My question --- I have set up an "other income" account for Poinsettia sales, and not as a contribution account (again, no donor credit). Given these items are not "budgeted", I don't want to run the expense through my "flowers and decorations" expense line. Should they be treated as a liability, or just add a new expense line for "Christmas Poinsettias" outside of the normal budgeted expenses? How do I then show what we've received for the item sales, expenses, and then the resultant surplus or deficit based on funds received vs expenses?

I'm not an accountant -- just seeking advice and / or ideas on how others handle this type of transaction using PowerChurch.

Thx in advance....

Greg

[wms7328]

In order to handle money received for any type of purchase, flowers, books, meals, etc. where the person is receiving something for his contribution. I created a separate accounting fund, I call it "Reimbursed Fund" . Set it up like any accounting fund with it's own chart of accounts. I do assign a contribution fund for these type of purchases so we can track who paid for what, just select that it will not be included in contribution statements when you set up the contribution fund. It will use an income account from the reimbursed fund and then when you purchase the item, flowers, books, etc, you would post it as an expense to this accounting fund. Ideally, if everyone paid for every item they ordered, then this fund will show income equal to expenses. However, that often does not happen so you can transfer the excess expenses not covered by income back to regular account as part of your budgeted expenses.

Hope this helps.

[Greghc48]

Thanks for your help!
I didn't realize that a contribution fund could be set up without giving donor credit. I'll look at that and fold that into the solution.
Really appreciate your help.

Thx!

Greg

[NeilZ]

Thanks for your help!
I didn't realize that a contribution fund could be set up without giving donor credit. I'll look at that and fold that into the solution.
Really appreciate your help.

Thx!

Greg

That's definitely thing to do, if you're using v10.4, you should just setup the Contribution Fund with a number that is outside of those you normally use for giving credit. That is, if you use 100 through 2000, setup the Flower/Poinsettia fund at 3000.
W
If you're using v11.x, you can set the Fund to be included or not using any number you wish.

That said, I cannot advocate creating a separate 'Accounting Fund' for what are essentially, pass-through funds. I would create the liability account for the income, and a new expense account that you would use for 'special' flowers such as for Poinsettias, and for Easter.

This provides both accounts that you need for double entry accounting (debit/credit) as well as a way to have history of what is spent each year for such flowers.

The money coming in would not show up in your income/expense report, as it is a pass through. There is more info on pass-through funds in the PCPlus manual, and in the built-in PCPlus help.

[Greghc48]

Neil,

Thanks again. I'll look at your suggestion and give that a go.... !

Thx again for the help.

[Greghc48]

Neil,

You mentioned an expense account for the poinsettias... Do you mean that my expense posting is really against the liability account for the poinsettias?

Assume the following:

Received $84 for poinsettias, and eventually will receive a florist bill for $84.00....

Post $84.00 to Contribution fund 161 (I have v11.5 so shows not included on statements)
Debit 01-1110-000 $84.00
Credit 01-2370-000 Flowers / Poinsettias $84.00

Receive bill from florist $84.00

Credit 01-1110-000 $84.00
Debit 01-2370-000 $84.00

Does this make sense??

Thx,

Greg

[NeilZ]

Neil,

You mentioned an expense account for the poinsettias... Do you mean that my expense posting is really against the liability account for the poinsettias?

Assume the following:

Received $84 for poinsettias, and eventually will receive a florist bill for $84.00....

Post $84.00 to Contribution fund 161 (I have v11.5 so shows not included on statements)
Debit 01-1110-000 $84.00
Credit 01-2370-000 Flowers / Poinsettias $84.00

Receive bill from florist $84.00

Credit 01-1110-000 $84.00
Debit 01-2370-000 $84.00

Does this make sense??

Thx,

Greg

Looking at this again, I went back to my copy of the database to take a look at what we had setup. I realized I confused the use of an expense account with a restricted income account NOT with what we do for Easter & Christmas flowers. No expense account is needed in this case.

What you have listed above for the debits & credits coming in from contributions, and what you have listed for paying the invoice is what we do. The money comes in, and goes back out with no expenses showing as it is indeed a pass-through.

There have been times when we have ordered more than what we received in donations, in which case when paying the bill we credited the checking account for the entire amount as normal, debited the liability account for the amount it held, and then debited our flower expense account for the remainder.

[Greghc48]

Neil,

Exactly as I did it today... Thx again for the advice.

I've written these nuggets down in my "PowerChurch Maintenance Manual" for follow up. I seem to forget the details behind some of these transactions as they are so infrequent.

Appreciate your help, and that of all the forum members with this stuff!

Greg

[Greghc48]

Neil,

A twist on this topic.... The poinsettia bill came in lower than expected by around $40.00.
So...We actually collected more funds for the poinsettias than we needed. I applied the collections against a pass thru contribution account, which established a liability for money collected... Thinking that we would probably wind up with a deficit and supplement the florist payment from a general expense account.

Now that I have a "surplus" liability, how do I clear that out after paying the bill? Would I make some sort of fund accounting adjustment for the $40 excess?

Thx

Greg

[NeilZ]

Neil,

A twist on this topic.... The poinsettia bill came in lower than expected by around $40.00.
So...We actually collected more funds for the poinsettias than we needed. I applied the collections against a pass thru contribution account, which established a liability for money collected... Thinking that we would probably wind up with a deficit and supplement the florist payment from a general expense account.

Now that I have a "surplus" liability, how do I clear that out after paying the bill? Would I make some sort of fund accounting adjustment for the $40 excess?

Thx

Greg

Basically correct. What I usually do is enter a Funds Accounting transaction to move the funds from the liability account (which is a good place for this type of thing), to our Missions income account. Its then used by our Mission Ministry for its end of year benevolences.