Designating some checking account dollars

[jordan2k510]

Our church board recently decided to create a Discretionary account. Then 'add' funds once a month when the checking account balance for that month is over $15,000. The money isn't being moved out of the checking account. It is only tracked in PC. Would I use an Equity account to keep track of the balance? What would the JE look like?

[Jeff]

There are a couple of ways you can handle this. If you are using one fund you would create a new equity account in your unrestricted equity section and call it something like "Board Discretionary" the journal entry to "move" the money would be to debit the unrestricted equity account and credit the discretionary equity account.

You could also set this up as another fund. In this case you would create a new accounting fund adding the checking account as an account in this fund. The accounting entry in this case would be more complex

Credit 01-1110-000 (checking)
Debit 01-9115-000 (transfer account)
Credit 05-9115-000 (transfer account)
Debit 05-1110-000 (checking)

The advantage of using another fund it will remove the non-operating money from your general fund. You can then look at the general fund to see how much is available to cover operations.

In either case, this amount would still be considered as unrestricted. Only amounts restricted by donors are shown in the restricted area of equity.

[jordan2k510]

Thanks Jeff. I appreciate the assistance.