New accounting fund needed?

[Jbulnes]

Our church is undergoing a major roof replacement totaling $121,000. Our annual operating budget is about $140,000, so this is quite large. In December, we made the first payment on the roof project, $31,000. The remainder will be paid in January. So this crosses year-end.

We have and will use unrestricted surplus funds for the outlays. We are requesting a $60,000, 0%, 5-year loan from our local Presbytery to replenish some of the unrestricted funds. We also intend to start a capital campaign to raise $60,000 -- pledges to be paid over 5 years. We actually already received $15,675 toward that campaign in December.

My questions:
1. Should I create a new accounting fund for Capital Improvements or just use a contribution fund that will segregate those gifts under temp restricted funds on the balance sheet in the Operating Fund (01)? I actually created a new accounting fund already (09), but have not made entries to it other than the December gifts, which could be corrected if a new accounting fund is not necessary. And I'm not clear how I would account for the payments for the roof (fund 01 or 09).
2. How can I show the expense on the profit/loss statement to make it clear it is an extraordinary item? Is there a way to create a "below the line expense category"?
3. Should I release the $15,675 that was received in December since we've already paid out $31,000?

Thanks for any help!

[NeilZ]

Our church is undergoing a major roof replacement totaling $121,000. Our annual operating budget is about $140,000, so this is quite large. In December, we made the first payment on the roof project, $31,000. The remainder will be paid in January. So this crosses year-end.

We have and will use unrestricted surplus funds for the outlays. We are requesting a $60,000, 0%, 5-year loan from our local Presbytery to replenish some of the unrestricted funds. We also intend to start a capital campaign to raise $60,000 -- pledges to be paid over 5 years. We actually already received $15,675 toward that campaign in December.

My questions:
1. Should I create a new accounting fund for Capital Improvements or just use a contribution fund that will segregate those gifts under temp restricted funds on the balance sheet in the Operating Fund (01)? I actually created a new accounting fund already (09), but have not made entries to it other than the December gifts, which could be corrected if a new accounting fund is not necessary. And I'm not clear how I would account for the payments for the roof (fund 01 or 09).
2. How can I show the expense on the profit/loss statement to make it clear it is an extraordinary item? Is there a way to create a "below the line expense category"?
3. Should I release the $15,675 that was received in December since we've already paid out $31,000?

Thanks for any help!

1. If you don't already have a separate Building Fund I'd create a new fund. If you have a separate Building Fund, I'd use that as this is a building cost.
2. If you're using a separate Accounting Fund, it will show up on the P&L for that fund, it won't show up in the Operating Fund P&L unless you run a consolidated report. There is no way to show a 'below the line' expense, other that it's not a budgeted item.
3. If you paid out the 31,000 from the operating, I'd release the 15K to cover that payment from the operating, in future, I'd write all checks from the new Accounting fund.

[Jbulnes]

Thanks for that reply. Some additional questions and observations:

I've already posted the $15,675 in campaign gifts to the building fund. The $31k already paid out was paid from the operating fund.

Should I change the fund number on the payment already made to come from the building fund? Otherwise, I can't exclude it from the operating P&L for December. Doing that, however, will cause an overdrawn condition in cash and equity in the building fund. Maybe I should transfer sufficient cash from the operating fund to the building fund to cover the difference for this payment and for the final payment coming due this month.

Finally, assuming we receive the $60k 5-loan we've applied for, should that also be recorded in the building fund? We hope to received at least that amount in pledges to be paid over 5 years.

[NeilZ]

Thanks for that reply. Some additional questions and observations:

I've already posted the $15,675 in campaign gifts to the building fund. The $31k already paid out was paid from the operating fund.

Should I change the fund number on the payment already made to come from the building fund? Otherwise, I can't exclude it from the operating P&L for December. Doing that, however, will cause an overdrawn condition in cash and equity in the building fund. Maybe I should transfer sufficient cash from the operating fund to the building fund to cover the difference for this payment and for the final payment coming due this month.

Finally, assuming we receive the $60k 5-loan we've applied for, should that also be recorded in the building fund? We hope to received at least that amount in pledges to be paid over 5 years.

I wouldn't change the initial payment, however, when the load comes in, along with the pledged, I would move funds from Building to Operating to cover that 'loan' of funds.

[Jbulnes]

So, if I understand you, you're suggesting that I book the loan and all the pledge revenue to the Building fund. Then move funds back to operating as I have surplus in the building fund. That makes sense. But if I don't change the application of the first payment (made in December) to the building fund, it will show up in the P&L of the operating fund, which is what I was trying to avoid. I'm thinking to apply that first $31k payment to the building fund and make a transfer between funds to make up for the shortfall of cost ($31k) vs gifts ($15,675). That way, the operating fund reflects the reduction in cash and equity but the cost is not included in the P&L. Effectively, the cost is moved to the transfer section.

[NeilZ]

So, if I understand you, you're suggesting that I book the loan and all the pledge revenue to the Building fund. Then move funds back to operating as I have surplus in the building fund. That makes sense. But if I don't change the application of the first payment (made in December) to the building fund, it will show up in the P&L of the operating fund, which is what I was trying to avoid. I'm thinking to apply that first $31k payment to the building fund and make a transfer between funds to make up for the shortfall of cost ($31k) vs gifts ($15,675). That way, the operating fund reflects the reduction in cash and equity but the cost is not included in the P&L. Effectively, the cost is moved to the transfer section.

Yes, you can adjust the system to point to the checking account under Building, and then transfer as needed.