USA Non-profit / church mortage

[Ada01]

hello,

What is the correct entry sequence for a church when entering the payment of a mortgage.

I took over the books for a church to help them get on the right track and when i moved the system to a true fund accounting system, the entries stopped "working".

They had created an "equity" account that was not a fund which I did not know was possible and then appeared to value that account at the total asset value (land and buildig) less the total mortgage.

The entries they posted:

Dr mortgage expense
Dr mortgage interest expense
Cr cash

Dr mortgage payable
Cr "equity"

To do this correctly, do I need to lessen the assets by the mortgage and continue this two part entry after correcting the balance. Is there an account type that I can pair with a building equity fund or do I simply need to post the entry like I would in normal corporate accounting:

Dr interest expense
Dr mortgage payable
Cr cash

Thabks

 

[smallbushelp]

What accounting software are you using? Are you trying to re-categorize accounts or did you create a new company file? Even though the church is a non-profit organization, they still need to account for their assets as assets and their liabilities as liabilities (not equity). True fund accounting does not have equity accounts. Get them back on track by creating a fixed asset account for the land and building, stop debiting mortgage expense, and debit the mortgage payable account correctly. Have they been accruing depreciation?

 

[Ada01]

I moved them to a newer cloud-based system but they had been on Membership Plus from years.

Is there any rule or past method that says to expense the mortgage for a non-profit. If this is simply an "old-school" philosophy then I will gladly do an adjustable no entry, if this is legit or has merit for any reason, I would like to try to figure it out.

 

[smallbushelp]

No rule that I'm aware of.