Hi, I am Ufuoma Ogaga from ...
Goshen Bookkeeping & Consulting.
In this tutorial, I will show you how to record ...
the release of used restricted funds for your ministry in ...
QuickBooks Online. This video is part three of my ...
series on how to record restricted funds and the ...
related expenses for your ministry in QuickBooks ...
Online. Check the links in the ...
description box to watch the part one and part two videos.
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There are two different methods to record the ...
release of used funds from restriction.
Option #1: if you are only using class ...
tracking to track your restricted funds,
you will need to use the check or expense method to ...
record the release of used restricted funds.
Option #2: if you are using class tracking ...
and location tracking, you will need to use a journal ...
entry to record the release of the used restricted funds.
Location tracking cannot be applied to line-item ...
transactions in QuickBooks Online.
In your charts of account, you need to create a revenue ...
account called Net Assets Released from Restriction ...
and a clearing account called JOURNAL to keep all of your ...
closing entries in one place to make it easier for you to find ...
them. Shoutout to my colleague ...
Megan Tarnow, who is another nonprofit pro ...
in my community for recommending the idea of ...
using a clearing account to keep things pretty.
So, now let's get to the fun part ...
of recording the release of the restricted $1,000 that we ...
disbursed two weeks ago to the Save the Children ...
Foundation in QuickBooks Online using option one ...
expense method.
Click on the +New icon and select expense.
I am going to select the generic vendor that I created ...
called Net Asset Release from Restriction.
My payment account will be the journal clearing account I ...
created offline.
The payment date will be the last date of the month.
The payment method can be left blank or you can select ...
cash. For the reference no enter a ...
unique number sequence like FR-01.
Ignore the location tracking box for now since we are not ...
using that in this option.
Under category details, line 1,
I will select my Net Asset Released from Restriction ...
revenue account and enter a description that says release ...
used mission fund from restriction.
I will enter the total amount I disbursed out of my ...
organization for this entire month and select my ...
outreach ministry/mission fund as the customer/project.
Then, select my temporary ...
restricted fund as the class.
I will repeat line 1 details in line 2 by selecting the same ...
revenue account, copy and paste the same ...
description, and enter the same amount ...
as a negative number. Then,
select the same customer and project and select my ...
general fund class.
You can also take this process one step further by ...
recording the release of restricted fund cash from the ...
restricted class to the general fund class by adding another ...
line and selecting the original bank account the funds were ...
deposited to. Then,
repeat everything again from above.
Add a fourth line, and repeat line 3 content but ...
make your amount a negative number and select the ...
temporary restricted fund class.
Repeat the description text in the memo field and click save and close.
Let's look at the impact of this expense transaction on the ...
outreach ministry mission fund project profitability ...
report. You can see the $1000 we ...
released from the restricted class to the general fund with ...
the expenses underneath it. Our net effect is zero for the ...
net assets released from restriction account.
When we look at the statement of financial position ...
by class report, you will see the cash has ...
been released from restriction between the general fund ...
class and restricted fund class creating a net balance of zero.
One main issue you will run into in QuickBooks Online is ...
that your statement of financial position by class ...
report will not look balanced and you will have this not ...
specified column because QuickBooks Online ignores ...
class tracking for source account such as your bank ...
accounts, undeposited funds,
etc. This is why option #2 will be ...
beneficial to you if you want to see the impact of this ...
transaction on your cash accounts.
Now, let's repeat everything we just ...
did using option two journal entry method with location tracking.
Click the +New icon again, select journal entry under the ...
other column. Select the last date of the ...
month as the journal date. You can continue with your ...
journal entry numbering sequence or you can create a new one.
In line 1, enter the JOURNAL clearing ...
account, enter zero for debit or credit,
and repeat the same description we used in the ...
check method. Leave the name field blank,
select without donor restrictions as the location,
and select the general fund class.
In line 2, select the Net Assets ...
Released from Restriction revenue account,
enter the total restricted fund amount disbursed in the ...
debit box, copy and paste the ...
description text from line 1 into line 2 description field.
Select the outreach ministry/mission fund as the ...
name, select with donor restriction ...
as the location, and the temporary restricted ...
class as your class.
In line 3, repeat line 2 but this time ...
enter the amount in the credit box,
copy and paste the same description from above and ...
select the same customer/project as the ...
name. Select without donor ...
restriction as the location and general fund as the class.
Repeat everything we previously did to release the ...
cash from restriction by adding 2 more additional lines.
In line 4, select the bank account the ...
funds were deposited to, enter the same $1000 in the ...
debit box, repeat the same description ...
from above, select the same ...
customer/project as the name,
select without donor restriction,
and the general fund class.
In line 5, do the reverse entry of line 4 ...
by selecting the same bank account,
adding the same amount in the credit box,
repeat the same description, select the same ...
customer/project, select with donor restriction,
and the temporary restricted fund class.
Copy and paste the description text in the memo ...
box and click save and close.
When we look at the outreach ministry mission ...
fund project profitability by class report,
you will see a decrease in the net assets released from ...
restriction revenue account under the restricted fund ...
class. And,
you will see an increase in the same account and for the ...
same amount under the general fund class creating a ...
net balance of zero.
When we look at the same report with the columns ...
displayed as locations, you will see a decrease in the ...
net assets released from restriction revenue account ...
under With Donor Restriction and an increase in the same ...
account and for the same amount under Without Donor ...
Restriction column creating a net balance of zero.
When we review the statement of financial position ...
by location report, you will see the cash has ...
been released from restriction between the With Donor ...
Restriction and Without Donor Restriction locations ...
creating a net balance of zero.
In an upcoming video, I will show you how to ...
closeout your year-end fund balances to the net asset ...
accounts on your statement of financial position.
So, make sure you hit the bell ...
icon and subscribe to my channel so you get an alert ...
when I upload that video. Thank you for watching!
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