cash transaction - how to record

[Carol D]

We recently hired a property management company to find a renter for a church property.
The management company charged one month rent 1575.00 for their service.
When the lease was signed they gave the first pro-rated months rent in cash which was 1275.00
So the management company accepted the 1275.00 cash payment and asked us to consider the remaining 300.00 as a donation to the church.

I could just enter a non-cash contribution for the 300.00 in their name and not record the other 1275.00
but it seems I would want to record the cash payment of rent and the expense of the management company service.

How would I record that or should I just be satisfied with the recording the non-cash donation?

Hopefully there is enough explanation for someone to answer.

Thanks.

[NeilZ]

We recently hired a property management company to find a renter for a church property.
The management company charged one month rent 1575.00 for their service.
When the lease was signed they gave the first pro-rated months rent in cash which was 1275.00
So the management company accepted the 1275.00 cash payment and asked us to consider the remaining 300.00 as a donation to the church.

I could just enter a non-cash contribution for the 300.00 in their name and not record the other 1275.00
but it seems I would want to record the cash payment of rent and the expense of the management company service.

How would I record that or should I just be satisfied with the recording the non-cash donation?

Hopefully there is enough explanation for someone to answer.

Thanks.

OK ... let me see if I understand:

1. You're renting out a church property, and have a management company.
2. The initial cost for their services is one month's rent $1575.00
3. They rented the property, and will only charge your $1275.00, leaving $300.00 as a non-cash donation.

Yes, you do want to show the initial cost of the management company, as well as the non-cash.

So, I'm assuming that you already have accounts setup for petty cash, rental income, and management company.

a) in whatever way you process non-cash contributions, record that $300.00 for the company.
b) using your petty cash account, you should show a deposit of $1275 there, and in rental income, using Enter Transactions in Funds Accounting.
c) you should then enter a manual check in Accounts Payable for $1275 using the petty cash account, and the expense of rental management property for $1275.00.

This will cover the initial cost, initial income, and initial expense without having to reflect any actual deposit to the checking account, and gives a full audit trail. I would also enter a complete explanation of each step in the notes area of the transaction, and the manual check.

I'm also going to suggest that you setup a repeating transaction in Funds Accounting for each month's rent payment that shows the amount going to checking, the income and the expense. It would look something like this assuming the fee is $200.00

01-4100-000 Rental Income CR $1575.00
01-1110-000 Checking DB 1375.00
01-5399-000 Mgt Fee DB 200.00

This accounts for the Rental Income, but also shows the amount actually received, and the management expense.

[Carol D]

I don't think I have a petty cash account. We have never had the need arise since I have been treasurer so I would need to set that up.
It may have been set up initially with our consultant and I have never used it so I don't recall seeing it in my COA.

I guess that is an asset account and it would close to it's own fund balance? I am not confident in setting that up correctly.
Would I be able to look at my current bank checking asset account and create this one similarly?

When entering the transaction in Fund Accounting to record the deposit into that petty cash asset account remind me which account is the debit and which account is the credit.

I think I will know how to enter the manual check to pay the management company from the petty cash account.

Thanks.

[NeilZ]

I don't think I have a petty cash account. We have never had the need arise since I have been treasurer so I would need to set that up.
It may have been set up initially with our consultant and I have never used it so I don't recall seeing it in my COA.

I guess that is an asset account and it would close to it's own fund balance? I am not confident in setting that up correctly.
Would I be able to look at my current bank checking asset account and create this one similarly?

No, it should not close to its own fund balance because any 'petty cash' account is unrestricted net assets, so use the one for the checking, normally 01-3110-000.

When entering the transaction in Fund Accounting to record the deposit into that petty cash asset account remind me which account is the debit and which account is the credit.

I think I will know how to enter the manual check to pay the management company from the petty cash account.

Thanks.

The petty account transaction is the same as you would see for a contribution. Asset - DB, Income - CR