How to Handle Payments for Functions that are not a budgeted Item

by Juli
(Quakertown, PA)

Our Church District holds a senior luncheon every year and one party pays the District for everyone's lunch. However, this year some of the attendees paid by writing out a check to our local denomination not directly to the person who paid for the luncheon.

Now they want me to deposit their check into our general account and pay them on a Church check.

Is this appropriate when it isn't a budgeted item and how do I expense it out in my accounting records?

Comments for How to Handle Payments for Functions that are not a budgeted Item

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Oct 30, 2014
Payments for unbudgeted items
by: MarcusNTexas

I learned after my first year as church treasurer to establish a "Miscellaneous Expenses account to handle these kinds of transactions. The checks received from individuals are deposited/recorded(as credits) to the Miscellaneous Expense account and then the check to make payments to the vendor or provider of the services is written on the Miscellaneous Expenses accounts (as debits). This has worked well for me over the last five years.

Oct 30, 2014
Thanks
by: Juli

Marcus thanks, that is pretty much what I thought too. however in the past the way it was handled at our church was to pick a budget item like witness commission other and dump the transaction there. The problem with that is that it then "appears" as though that commission went over their budget limit until you dig into it deeper. I just took on the position as Treasurer but have been doing bookkeeping for close to 15 years and I am finding that the previous person didn't know what they were doing and I am playing clean up of a huge mess!

Oct 30, 2014
Being above reproach
by: D Fry

I would recommend returning the checks to the original check writer. Otherwise it may appear that a contribution was made to the church, when they were actually paying for lunch. It may sound picky, but it is best to avoid even the appearance of impropriety. And to not let anyone be tempted to use their payment as a tax deduction.

Oct 30, 2014
Payments for unbudgeted items
by: MarcusNTexas

To eliminate the possibility that tax deductions could be taken for payments that are reimbursements and not tithes or other legitimate contributions, make sure the purpose of the check is clearly marked on the memo line. Also, a "NOT TAX DEDUCTIBLE" stamp can be purchased so that the check can be stamped. In addition, when the secretary or other person responsible for maintaining the giving records of church members processes the reimbursement payment it can be shown posted as a non-deductible item. The secretary at our church always touches base with me (the treasurer) any time a check is received that shows something other than "Tithe" on the memorandum line of the check. Juli....sorry you are having to clean up problems left by your predecessor. It is good that you have a strong bookkeeping background.

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