Restricted Funds

[pessner]

I am new to this software and am overseeing (new here too) the accounting for the church. I have instructions from HELP regarding temporary restricted funds for setting up an income account, equity account and release account. Here is the question:

Our church tithes a percentage of tithes received from givers each month to a state agency. There is NO CASH transaction. How do I record all entries needed for the restricted amount?

Example: (my thought)
Tithe amount: $500
Debit: Church's expense account $500
Credit: Tithes & Offerings? $500 ???

Debit: Equity (restricted account) $500
Credit: Agency's restricted account $500

Help!!!!
Pat Essner
517-743-1504

[NeilZ]

I am new to this software and am overseeing (new here too) the accounting for the church. I have instructions from HELP regarding temporary restricted funds for setting up an income account, equity account and release account. Here is the question:

Our church tithes a percentage of tithes received from givers each month to a state agency. There is NO CASH transaction. How do I record all entries needed for the restricted amount?

Example: (my thought)
Tithe amount: $500
Debit: Church's expense account $500
Credit: Tithes & Offerings? $500 ???

Debit: Equity (restricted account) $500
Credit: Agency's restricted account $500

Help!!!!
Pat Essner
517-743-1504

FWIW .. you should NEVER have to touch the equity account in normal transactions. If the income account is setup to close to the proper account (whether the default equity account, or one you created for this income) the system will correctly debit/credit equity.


Now you could just set this up in Contributions.

1. Create a Contribution Fund that:
a) does not appear on Contributions Statemens
b) is setup to point to a restricted income account
c) is setup for an Automatic Transfer of 10% of the Contribution Account used for Tithes and Offerings. This will automatically move 10% from the Tithes and Offerings Income Account into this Restricted Income Account when posting contributions to funds accounting. The total Contributions of tithes and offerings will still be reflected in Contributions, but when it gets to Funds Accounting, 10% will be skimmed off the top and show up in the Restricted Income.

2. You then create a check to send to the agency based on the income showing in the Restricted Income Account.
If you have the vendor setup correctly, then for the Credit, your checking account will appear on the check, for the debit, the correct Expense account will appear (again, you have to have the vendor (agency) setup properly in Accounts Payable).

3. Before you save the check you Release Restricted Funds from the Restricted Income Account, which I'm going to assume is the total income in that account at the end of the month.

Do you see the progression here? This basically eliminates much of the manual calculations needed, and has everything setup for you to go and print the check.

[pessner]

Awsome! Thank you so much!