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LunaP

Contributor

02/07/12 9:21am PST
Viewed by asker 02/08/12 1:18pm PST

Tracking restricted funds

US QuickBooks Pro for Windows : 2009

I read the Ivens book, but I still couldn't figure this out. My goal is to have the equity account track all transactions on the fund, and to show the balance of the fund on the profit/loss statement.
I have an equity account set up for a temp rest fund. I have an inc and exp acct set up for the temp rest fund. I have one general checking account that holds all the money of the organization - it receives income and pays expenses.
So, what are the accounting steps to take when a donation comes in for a temporarily restricted fund? And what accounting steps do I take when a payment is made out of that fund? For instance, altar flowers. Members donate money each week to pay for the flowers. The bill comes in from the florist monthly, and the money to pay that bill comes out of the funds the members have been donating. How do you do that, step by step?

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qbteachmt

Allstar, Accountant Community AllStar

02/07/12 12:51pm PST

The solution

"My goal is to have the equity account track all transactions on the fund, and to show the balance of the fund on the profit/loss statement. "

This won't happen, because P&L is Income and Expense data, but the fund balance is in Equity and will be seen on the Balance Sheet (Financial Position).

"So, what are the accounting steps to take when a donation comes in for a temporarily restricted fund? "

Donation, to Income, Class = Restricted. Or, donation to restricted Income, class = program.

Also, rebalance Equity: restricted increases.

"And what accounting steps do I take when a payment is made out of that fund? For instance, altar flowers. Members donate money each week to pay for the flowers. The bill comes in from the florist monthly, and the money to pay that bill comes out of the funds the members have been donating. How do you do that, step by step? "

Write Check, Class = Restricted; or Class = program.

Also, rebalance Equity; restricted decreases because you used some.

It takes some working through it, with Kathy's book, to finally make sense. It also depends on how you use QB.

For instance, I do not rebalance Equity in the one file I manage that has Restricted Funds. It is a single-purpose government entity, so I do not use Class at all. I use bank subaccounts for everything. The only thing restricted is actual Funds.

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LunaP

Contributor

02/07/12 1:05pm PST

Thank you. I've been reading a lot of your posts on this topic today. I've considered using the bank subaccounts, and might still. I don't really want to use classes because the organization is using them differently already. I'm going to let your answer marinate in my brain for a little while and see if I can get it all worked out.

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qbteachmt

Allstar, Accountant Community AllStar

02/07/12 1:39pm PST

Right; after reading the book, I ended up not using any of the functions.

It just depends on what you need on your reports.

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LunaP

Contributor

02/08/12 11:28am PST

I think I will use the sub bank accts method. I hope you'll read this and let me know if I'm missing anything:

I'll receive the donations for the temp rest fund directly into the sub bank account and use the associated income account. I'll pay the invoices for the temp rest fund from out of the same sub bank account and use the associated expense account. I'll be able to see the account activity on the P&L, and the fund balance on the Balance Sheet (I really meant to say Balance Sheet yesterday by the way). When I reconcile the bank acct, I use the parent account which shouldn't have any transactions posted to it at all.

Is that right and do I need to do anything else to account for everything?

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qbteachmt

Allstar, Accountant Community AllStar

02/08/12 1:12pm PST

Your review is how I am doing it with the single-purpose government entity file I manage, and it passes a Public Audit.

Whether or not you might want or need to rebalance equity at year end, with just one entry, might be something to discuss with your CPA.

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LunaP

Contributor

02/08/12 1:18pm PST