setting up preschool in church's accounting system

We will begin to pay our preschool's salary including appropriate taxes. I want to set this up in accounts receivable because they do pay the church back but am unsure as to what accounts are needed. Any suggestions or links appreciated.

Comments for setting up preschool in church's accounting system

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Jan 17, 2015
 setting up preschool
by: Lewis in NC

It seems advisable to set up separate accounting systems for church operations and Preschool Operations or maybe a subset for Church Preschool Operations.

To get the preschool started the church operations may write a check of $XXXXX.000 to place in the cash account (checking account) of the Church Preschool books. The bookkeeping transaction would go like this: Debit Accounts Receivable/Operations account and credit Cash/Operations account (source document: memo explanation to start Preschool), then (in the Preschool books) Debit Cash/Preschool account and credit Cash Payable/Operations account.

If this is to be a self-sustaining preschool, I would recommend separate checking accounts for church operations and preschool operations.

When the preschool is operational then the above transactions would be reversed at the point that the preschool could sustain its own expenses with its own cash flow. The Preschool checking account would be used to pay back the operations checking account. Hope this makes sense to the new bookkeeper.

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