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Old 09-26-2017, 09:37 AM
childaid childaid is offline
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Join Date: Nov 2013
Location: Clearfield, PA
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Internal Chargeouts

We recently purchased additional office space, and I want to charge each program for the space that they use. One program is funded by billing the county for billable hours. Another program is funded by a grant.

I don't want to charge the program and then post it as income, as it would overstate the true income of the agency. A credit to expense would keep the books straight but if I just use the same expense codes, it gets a little confusing. Should I create a separate "expense" to credit the proceeds of the charge?

I should point out that separate each program utilizing QB's class function. I even separate each budget year of my grants via the class function.
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Old 09-26-2017, 04:19 PM
Lorin Browning Lorin Browning is offline
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One way: Allocate utilities, appropriate repairs and depreciation to the different program centers.

Don't' just use CLASS just for budget purposes. You can also use it for billing purposes. For example, you would not need separate accounts for electricity for each center. Just allocate according to the program services which use the spaces.

I think you have a conceptual problem when you say, "I don't want to charge the program and then post it as income." Of course, whenever one bills for an expense, the payment of the bill is income (offset by the expense which was billed).

In not-for-profit accounting, there is nothing left to post revenues and expenses from operations when they are allocated to the appropriate classes: Fund Raising, Program Services, and Administrative. Of course, each of these classes can have sub-classes.
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Old 09-26-2017, 04:44 PM
childaid childaid is offline
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This charge to the grant program would be strictly for rent. Utilities and other expenses are allocated based on FTE.

The accounting that I am trying to resolve is that previously the grant occupied leased space. The lease was paid monthly to the landlord, resulting in an expense on the grant. I would then draw down funds to pay the expense and would show that as income to the agency netting out to $0.

By November, we will move our staff into our newly acquired office space. In short we become the landlord. I will charge the grant for the space they are utilizing, and credit our admin area. I now have an expense on the grant that I can draw down funds to cover the expense. The funds I draw down will still be considered income. The dilemma is the credit side of the lease expense that is in the admin should not (in my humble opinion) be considered income as it will overstate the income. The cash only comes in the door once, the credit to admin is really to reallocate the expense.
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