How to properly record a church mortgage payment?


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I am the new bookkeeper at my church and am having an issue with how to record our mortgage payments. Everyone I talk to says I'm doing it correctly, but there is a problem I need help resolving. We use fund accounting, which I have never dealt with prior to this position.

When I record each payment, I do the following:
CR Checking account
DR Mortgage liability (principal)
DR Mortgage interest expense (interest)

(Checking & Mortgage liability are balance sheet accounts, Mortgage interest expense is an account under the general fund)

This works as far as properly reducing the checking account and remaining mortgage on the balance sheet, however, the principal portion is deducted directly from cash without being expensed through a fund department, like the interest portion is.

I was told that the combined total of all our funds should always equal what we have in our checking account, so this method creates a gap between what is in our general fund and what is left in checking.

Any help would be appreciated! Thank you!
 
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kirby

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Your entry is correct. I've been making the same type of entry for years.
 
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I am the new bookkeeper at my church and am having an issue with how to record our mortgage payments. Everyone I talk to says I'm doing it correctly, but there is a problem I need help resolving. We use fund accounting, which I have never dealt with prior to this position.

When I record each payment, I do the following:
CR Checking account
DR Mortgage liability (principal)
DR Mortgage interest expense (interest)

(Checking & Mortgage liability are balance sheet accounts, Mortgage interest expense is an account under the general fund)

This works as far as properly reducing the checking account and remaining mortgage on the balance sheet, however, the principal portion is deducted directly from cash without being expensed through a fund department, like the interest portion is.

I was told that the combined total of all our funds should always equal what we have in our checking account, so this method creates a gap between what is in our general fund and what is left in checking.

Any help would be appreciated! Thank you!
I agree.

Kenneth Hoffman, EA
954-591-8290
 

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