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Level 1

Showing a transfer as an expense also

My office has stopped paying one of our entities until they comply with the set requirements for funding. We have been depositing their monthly distributions into an escrow account. Since we have been transferring the payments to another bank account they are no longer showing on our P&L's as an expense under the entities account like it normally would have. My board of directors president insists it still needs to show as an expense so that the P&L's will show a more realistic accounting of how much we actually have available in our budget. I've tried explaining to her that QuickBooks will not allow it. I also tried walking her through the process to no avail. I even tried to explain that if we show a transfer as an expense now, once we start paying that money out to the entity it's being held for when they come into compliance, it will show as a double expense.

 

Is there any way show it as a transfer AND an expense to please them?

2 Comments
Highlighted
Level 15

Showing a transfer as an expense also

you could set up a liability account, then a journal entry'

debit expense, credit liability

then you pay out of the bank the liability account

you could still transfer to the escrow account

Highlighted
Level 15

Showing a transfer as an expense also

It's not an Expense, while held in Escrow. That's an Expenditure, to an Other Current Asset account = someone is Holding it for you, until dispersed.

 

Run the Statement of Cash Flows for the board, to see this movement. Escrow is not on the P&L. It's a Bank type of account, really.

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