Wrong entries going back years...how to correct?

[UUUSOffice]

Hello!

We have an endowment fund that loaned money to the church for a small mortgage. Payments that come in on this loan have been improperly credited as donations to the endowment fund for over three years, leaving the loan balance artificially high and investment income artificially low (non-existent!).

I am fairly new here and am just getting around to cleaning this up. I ache at the thought of doing anything more than a catch-up set of entries. So, my first question is, how bad would that be, to just make the cash match what's in the bank and make the Loan Receivable match the amortization schedule?

Powerchurch is showing about $8k too high in the Loan Receivable account. Also, the bank balance is off by about $250. If it seems okay to just do catch-up entries, then what in the world are my balancing entries?

DB ...?
CR Loan Receivable $8k CR (to make it match what is actually still outstanding)

DB Cash in bank $250
CR ?

And then there's the fact that loan interest income to Endowment is showing in Powerchurch as non-existent for the last three years, when it's really not, but I don't think I'm going to worry about fixing that prior to this fiscal year (July 1), which is when I started working here. Does that seem reasonable?

Thanks so much! Your advice is so valuable.
-- Sandy in Orlando

[NeilZ]

Hello!

We have an endowment fund that loaned money to the church for a small mortgage. Payments that come in on this loan have been improperly credited as donations to the endowment fund for over three years, leaving the loan balance artificially high and investment income artificially low (non-existent!).

I am fairly new here and am just getting around to cleaning this up. I ache at the thought of doing anything more than a catch-up set of entries. So, my first question is, how bad would that be, to just make the cash match what's in the bank and make the Loan Receivable match the amortization schedule?

Powerchurch is showing about $8k too high in the Loan Receivable account. Also, the bank balance is off by about $250. If it seems okay to just do catch-up entries, then what in the world are my balancing entries?

DB ...?
CR Loan Receivable $8k CR (to make it match what is actually still outstanding)

DB Cash in bank $250
CR ?

And then there's the fact that loan interest income to Endowment is showing in Powerchurch as non-existent for the last three years, when it's really not, but I don't think I'm going to worry about fixing that prior to this fiscal year (July 1), which is when I started working here. Does that seem reasonable?

Thanks so much! Your advice is so valuable.
-- Sandy in Orlando

First off ... before you do anything, do a backup of the accounting files using the Powerchurch backup utility.

Then .. adjusting the bank balance. Since you were using Contributions to add money to the fund, If you look at any Contribution Transaction that added money to the account, you should use those two accounts listed there, these are probably the checking account, and some type of income (4000 level) account. You would Credit the checking account, and Debit the income account for the 250. This will reduce the checking account, and reduce the income account.

As far as the other item. I would run a "Balance Sheet" report to see exactly what the assets and liabilities are. Let us know what you find.

Also, I'd advise doing a search in this forum on loans, as there are a few threads that cover what is normal for tracking loans.

[UUUSOffice]

Neil, you're the best! What an asset to this forum.

Always have a backup, every day that I work.

Figured out the cash part right away. Your answer helped me figure out what I was missing in my understanding of what I need to do.

I definitely need to do this:
DB Endowment Donations
CR Endowment Loan Asset Account
CR Endowment Loan Interest Income

The bugaboo is not knowing how much is the loan principal and how much should go to interest for all the payments that were charged improperly prior to refinancing the loan in July 2015.
The amortization schedule that was used prior to that is nowhere to be found (the person who made it up has died).

I was thinking about just bringing this fiscal year (July 1) into proper accounting and just not even worrying about prior years, but then how do I get my loan balance to reflect what is actually still a receivable asset? I just can't figure how to split up those credits when I have no idea how much goes to principal v. interest!

[NeilZ]

Neil, you're the best! What an asset to this forum.

Always have a backup, every day that I work.

Figured out the cash part right away. Your answer helped me figure out what I was missing in my understanding of what I need to do.

I definitely need to do this:
DB Endowment Donations
CR Endowment Loan Asset Account
CR Endowment Loan Interest Income

The bugaboo is not knowing how much is the loan principal and how much should go to interest for all the payments that were charged improperly prior to refinancing the loan in July 2015.
The amortization schedule that was used prior to that is nowhere to be found (the person who made it up has died).

I was thinking about just bringing this fiscal year (July 1) into proper accounting and just not even worrying about prior years, but then how do I get my loan balance to reflect what is actually still a receivable asset? I just can't figure how to split up those credits when I have no idea how much goes to principal v. interest!

Unfortunately, without knowing what that amortization schedule looks like, you can't do much. However, there's an online calculator that may help you recreate that schedule.

http://www.bankrate.com/calculators/mor ... lator.aspx