Posting Interest on CDs

by Kelli

I inherited the policies of this church and was not here when the system was set-up
The church uses fund accounting and everything goes pretty smoothly. We have a general budget account and a restricted designated account set-up using Quickbooks. Everything is kept separate on the church computer.
Here is where is gets tricky:

In order to be good stewards of their funds, each of the accounts has money in the one bank checking account and each also has put money into a CD to earn interest.

They are set-up to rollover automatically. In the past, the previous bookkeeper would post the interest when the CD matured and the interest was rolled over. The woman who used to take care of the CDs is no longer at the church and never turned over the CD information.

The general account CD has only be renewed once since it was set-up, on 8/25/2009. The new balance at renewal was $515.49 MORE.
So can I post it as Interested Earned and add it in like other CD interest was done in the past? I have an 80+ year old lady telling me I have to do it as Retained Earnings.

The BIG problems is the CD for the designated funds.
It was LAST renewed 6/13/2009 and at that renewal time it was actually valued $1,073.05 MORE, so it has been renewed more than once. The last transaction posted in QB is from 2/14/08.

So two questions on this one:
How do I post the interest now? And do I deposit the interest into Designated? or can it be credited to General as interest? I have one lady telling me I need to divvy up the interest among all the sub-accounts in the designated accounts and I have one lady telling me I can post it as interest and put it anywhere the church votes on, and I have the other lady still telling me it is RETAINED earnings.



Yes, you would post it as "Interest Earned" and no :-) it would not be retained earnings. “Retained earnings” in church accounting is really Net Assets which in plain English is fund balances.

Most of the time (unless otherwise specified) earned interest goes into the general fund to use any way the church chooses. It's posting the back interest I am not completely sure about. I believe you would just post the interest earned to date now, but if you want to be 100% sure, you could consult a CPA. Sometimes CPAs will give churches free advice.

Hope I did help in some way and didn't confuse you more :-)

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