Hi B I assume the family has already paid the full amount up front and then has subsequently submitted the paperwork to be reimbursed? If that's the case, I would do the following entries: Receipt of money: into bank account, record as revenue Payment of money: print check, record as expense (probably as a 'below the line' Other Expenses' since it's not a normal operating expense of the day care) In this way, while you've recorded the revenue from both the family and the government, the money from the government is also recorded as an expense, offsetting the revenue from them, essentially becoming 0-sum for tax purposes. Hope this helps!
