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Accounting for a Trust
01-09-2010, 04:31 AM,
Accounting for a Trust
I'm computerizing the books of a small registered trust, and i have 2 small queries...

1 - <b>When donations in the form of cash are made, what accounting entries take place?</b> (what i've done so far is this...debit Charity Expenses, credit Cash). but something is wrong because shouldn't i have some sort of Accumulated Charity Expense account similar to Accumulated Depreciation Account? ...

<b>2-the following scenario takes place (different time)</b>

<i>intro-the petty cash account has a beginning balance of zero
1-trust member gives money to the needy through her pocket (theoretically through the Petty Cash account, but physically from her own wallet...this is purely because of convenience as the money is kept in a bank account)
2-trust member records transaction on a slip
3-trust member gets re-reimbursed for out-of-pocket expenditure at the end of the month</i>

what happens to the petty cash account since money is being spent without the actual cash in the account? My limited knowledge tells me this

<i>-petty cash account goes negative (credit) during the month
-notes payables credit
-Charity Expense??? (what happens to this?)

when the cash is drawn from the bank at the end of the month
-petty cash account becomes zero, or positive
-notes payable is debit</i>

pls help me out. i feel pretty lost...
01-29-2010, 07:24 AM,
Dear helga,

I guess you have confused some simple concept or I have not got your questions.

Donations received in the form of cash. Simply
Cash a/c DR
Donations CR
This is quite similar to what you donations received in bank. I don't think that any account like Accumulated Charity Expense is required or used at all.

When trust members pay from their on pocket
Expense DR
Notes Payable CR

When reimbursement is made
Notes Payable DR
Bank CR

In the end notes payable gets balanced and bank is credited by the amount of expense incurred on charity.

Hopefully your question is answered.

01-29-2010, 07:39 PM,
Helga are you talking about donations recieved or donations given? By your wordings it seems it is donations given

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