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  #1  
Old 03-22-2017, 02:17 PM
tvmangum tvmangum is offline
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Location: North Carolina
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Donations to a scholar

Last year our PTA accepted donations for a scholar that was involved in a traffic accident. She was in the hospital for several weeks. The scholar will be leaving the school when the school year is over. There is $360 left in the fund. What should we do with the rest of the money and how would I account for it in QB?

I know that it is technically a long-term liability but I just have it right now as an expense account so it shows up on our monthly reports--long story. I just want to be ready when the time comes for us to close out the year and when the scholar leaves the school.
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  #2  
Old 03-22-2017, 03:39 PM
Lorin Browning Lorin Browning is offline
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By code, the donations cannot be both (1) restricted to be used for a specific person and (2) be considered as a deductible expense by the donor.

Consider the following:
According to IRS Publication 526, contributions earmarked for a certain individual including those that are needy or worthy are not deductible.

However, if an individual gives a contribution to a qualified organization that in turn helps needy individuals, the contribution would be deductible...if that individual does not designate a specific person(s) they want their gift to go to.

Revenue Ruling 62-113, states that the test in each case (whether or not deductible) is whether the organization has full control of the donated funds, and discretion as to their use, so as to ensure that they will be used to carry out its functions and purposes.

If you are still using funds, just re-classify it to another fund. If there was a line item in your chart of accounts designating that money for that particular person, just make a general journal entry transferring the balance to another class.

Let me make my point from a different perspective: The donations were initially misclassified if they were accepted as restricted. If they were misclassified, reclassify them as unrestricted.

My wife and I are involved with multiple 501(c)(3) organization which give scholarships: for theater students, for music students, for older students wanting to go to or back to college, etc. The organizations receive many donations for their scholarship programs for which their donors can take a tax deduction, but there is one common factors -- no donation is accepted which is restricted for the use by a designated student.
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Last edited by Lorin Browning; 03-22-2017 at 06:11 PM.
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  #3  
Old 03-23-2017, 04:26 AM
Rustler Rustler is offline
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Location: Texas - The Republic
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Quote:
Originally Posted by tvmangum View Post
Last year our PTA accepted donations for a scholar...... There is $360 left in the fund. What should we do with the rest of the money and how would I account for it in QB?

I know that it is technically a long-term liability but I just have it right now as an expense account ...
If I understand this, you accepted a donation
I assume it was deposited in a bank account
and you used an expense account as the source account for the deposit?

Would you explain how you entered the receipt of the donation to start with?

A donation is normally income, though in this unusual case I agree I would use a liability account, as the source account for the deposit.

Then when you pay it out, you use that liability account as the expense for the payment

If you are not going to pay it out, then it is income to you, journal entry debit liability and credit income
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  #4  
Old 03-23-2017, 02:42 PM
tvmangum tvmangum is offline
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Join Date: Sep 2016
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The receipt of donations was done prior to my becoming treasurer. I inherited a mess (paper records and a year ending statement) and tried to set everything up correctly (ex. income, long term liability, assets, etc.). I want to do the accounting process correctly but trying to explain to my board what is going on is quite difficult. I had a board member ask me last month what the numbers in red and the numbers in parenthesis meant. Plus, my board does not understand things like long term liabilities, short term liabilities, assets, etc. I do not think it is my job to teach them how to read a financial statement.

Problems arise when I try to do my monthly statement and all of the accounts do not show up. (This is another issue that I have requested help on previously but just can't get it to work.) I have a test copy of my actual "company" so I can try things before I do them for real. Guess I need to go back to the test version and work there in trying to get the month ending report that I really need--one that lists everything on one happy, little report.
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  #5  
Old 03-25-2017, 04:08 AM
Lorin Browning Lorin Browning is offline
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Two suggestions concerning things missing from your reports:
  1. Select show all accounts (and not just the active accounts). When the report comes up, select Customize and select All instead of Active on both rows and for columns. There could still be data in some inactive accounts.
  2. Check to make sure that you have not filtered out some accounts. On the Customize screen, click on Filter to verify that all and only the accounts you want are to be in the report.
One suggestion concerning red numbers in parentheses:
  • Still on the Customize screen, click on Fonts & Numbers on the top tab, and select Normally as the method to show negative numbers.
You say "I do not think it is my job to teach them how to read a financial statement." I would assert that it is part of your job as an officer of the organization to explain to the board members the content and significance of the financials you prepare. That is one major function of being a treasurer.
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