Question

Split a deposit between fiscal years

Forum|Forum|7 years ago
February 4, 2019
2 replies
26 views

Our organization is a nonprofit and as such receives regular funding from grant making foundations. However, these foundations often operate on fiscal calendars different than our own which means that when we receive a grant payment from a foundation we often have to split the amount between our budgets for one year and the next.

I'm wondering if there's a way to report that in our Quickbooks reports. Currently, what happens is it looks like our income/current balance is almost twice what it needs to be because it appears we have receive twice the amount of money we need to finish this fiscal year. When in reality, we don't have that much available to use right now and instead the funds are allocated to next fiscal year (starting July 1st). Is there a way to split a deposit between fiscal years like this?

QuickBooks Online

john-pero

Level 12

Cash Basis reporting is showing 100% of funds in as income. Split invoicing and Accrual reporting might be one answer, or

You can change from recording the entire grant as current income by recording part of it as a current liability, then in next fiscal year move it to income.

B

branholmAuthor

We have Quickbooks set to Accrual, however I'm not sure how to reflect this as we don't invoice for grants since it is just money received.

Can you explain more about how I would record it as a liability and then move to income? Not sure what this means.

I'm also concerned that by not recording the full amount immediately, it will cause an imbalance between Quickbooks and our bank account since we do actually receive the money all at once, we are just restricted to using a portion of it it until later.

Thank you for all the thoughts on this matter!

A

Anonymous

Hello, branholm.

You can move your records from liability account to income account by creating a journal entry. For detailed steps on how to do this, please refer to your article: https://quickbooks.intuit.com/community/Help-Articles/How-to-create-a-journal-entry/m-p/192925

Moreover, the payments would still be recorded on the bank account in QuickBooks and would still balance the actual bank.

Lastly, It’d still be best to consult your accountant to make sure you’re recording the transactions correctly.

You're always welcome to visit us again if there;s anything we can help you with.

T

tinabina

Hi. Did you ever get a clear answer for this? I'm wondering the same thing. My guess is to record part of the funds as income and the other part as Deferred Income (aka Deferred Revenue aka Refundable Advances) which is a liability account. It's a liability in that if for some reason you didn't fulfill the services you are to render for the grant, you would technically owe that money back to the funder. So one idea for example would be that if you got $10,000 for example and $2K was for the current fiscal year, you'd record that $2K into one of your income accounts e.g. Foundation Grant and you'd record the remaining $8K as Deferred Income (again, this would be a liability account). Then in the new fiscal year, you would do a journal entry from the liability account to the income account i.e. from Deferred Income to Foundation Grant. Thoughts?

J

JDBRobinson

Hi there.

I deal with this situation a lot as well. I am working in accrual-based books with a lot of donations that split from month to month or at the end of the year from year to year. A workaround is to invoice for the charge on the date the charge originated, then accept the payment to the date it hit the bank. This means it shows on the correct date in your bank register, but will sit in the other month or year on your P&L. If you're dealing with merchant processing fees, you can invoice the full donation amount, accept payment for the full donation amount and deposit to undeposited fund. Then you can do a bank deposit and add in the merchant fees as a negative amount. This balances your total deposit amount but keeps your full donation amount intact. Hope this helps.

There was a way to set up an accrual account in your Chart of Accounts to save you a few steps at year end, but I can't quite remember the steps for that process.

Note that if you are receiving multi-year grants and are accrual not cash based, then you should record the entire grant amount when the grant is confirmed. This can be challenging as many boards expect to see cash-based reporting on money received, while your books will reflect accrual based receipt of grant money.

Good luck!

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