Scout Troop Account Structure & Invoice Procedure for Dues

Mon Apr 4 03:00:07 EDT 2016

Hi Joshua,
I think you have the steps reversed. 
 Step 1.Your treasurer should create and post in the accountsinvoices for
the Membership Assessment and then mail/give copies of them to the parents.
Each invoice when posted to the accounts  creates a debit  entry in your
1100 Accounts Receivable account ( money owed to your troop) and will also
create a credit entry in an Income/revenue account ( this may be your 2100
Scount Account Nick ) but if your books have to be audited then it would be
better to name it Income:Membership Assessment where Membership Assessment
is a sub account of the top level Income Account ( Gnucash  should create
top level accounts labelled Assets, Liabilities,Equity, Income and Expenses
by default. These are the normal headings for a balance sheet and you may
create any subaccounts using these as parent accounts.  Gnucash will then
total the subaccounts into the parent accounts). Your Checking account and
Accounts Receivable are Asset accounts. You can create additional income sub
accounts to cover income from fund raising activities or any other
activities your troop might carry out. 

2. When your treasurer receives payments from the parents, he issues them
with a receipt and records the payment against the appropriate invoice using
the Business>ProcessPayments menu item or if he has the invoice displayed,
the Business>Pay Invoice menu item.  If you create another asset account
Undeposited Funds he should create a transaction with adebit entry to this
account for the amount of the payment and a credit entry in the Accounts
Receivable account associated with the invoice you have paid.  

3.When he deposits the funds in the bank account he creates a transaction
where the checking account is debited (increased) by the amount deposited
and the Undeposited Funds is credited by the amount deposited. (It is
possible to debit the Checking account and credit the Accounts Receivable
directly in paying the invoice but generally not desirable as you then have
no record of funds collected but not yet deposited in the account and if
your treasurer forgets to pay money in there is a reminder for him when the
balance of the Undeposited Funds account does not return to zero when the
money is deposited).

When you spend money from the Checking account, you create a transaction
which credits( decreases the balance) your Checking account by the amount
spent and debits (increases the balance) an Expense account. Similarly to
the Income account Expenses is a header account and you can create  sub
accounts for specific categories of expenditure (Equipment, Travel etc) as
required.

Now to deal with your over payment. If you enter the check amount as the
payment ($25), by default Gnucash will try and put all of this as a credit
against the Accounts Receivable. If you do this and open the split for the
transaction from the checking Account you will see two associated entries to
the Accounts Receivable on the lines which open up - one for $24 for payment
of the invoice and one for $1 for the over payment. You could also look at
this transaction from Accounts Receivable. Here you will see an Invoice (I
in the column labelled T) entry with a debit of $24 recording the posting of
your invoice and two payment (P in the column labelled T) entries one for
$24  and the other for $1. If you open either of these (click on them) they
will show that your checking Account is debited by $25 and two entries with
a credit to your accounts receivable for $24 and $1by the payment
transaction with the over payment. 
At this point you need to create an Income subaccount  Overpayments. If you
then click on the Assets:Accounts Receivable line for $1 (from either the
Checking Account or Accounts Receivable you will get a symbol which looks
like a rounded sqare with a minus sign in it which will open up a list of
your accounts if you click on it locate the newly created
Income:Overpayments account in that list and select it. The lines of the
split  of the transaction should now read something like:                                                                                                    
Debit                      Credit

Assets:CheckingAccount                    $25

Assets:Accounts Receivable                                               
$24

Income:Overpayments                                                         
$1
. 

At this point you need a policy decision on handling overpayments.   If you
wish to refund overpayments to the the parents then when you give the money
back to them you would create a transaction in which you credit your
Checking account (by $1 in this case) and debit the Income:Overpayments
account (again by $1 in this case).  Your parents may say don't worry its a
donation. In this case you could create an Income sub account
Income:Donations  and the transaction recording this would be a debit(of$1)
to the Income:Overpayments and a credit of $1 to Income:Donations. It may be
simpler to consider that all overpayments are donations but if a parent were
to demand an overpayment back you might have to explain to an auditor how a
donation went missing. ( not a huge problem for the odd $1 but if it was a
significant amount you might have problems). 

Where I live community groups like scout groups are required to obey certain
rules and accounting procedures and if they have assets over a certain
amount, they are required to have an accounting firm audit their books)
which is why the emphasis on recording the various phases of receiving and
depositing money in detail. 
I would start with a basic chart of accounts as follows. The numbering is
less critical than setting the account type when you edit or create
accounts:

1000 Assets   (top level account -placeholder only)
1010 Assets:Checking Account
1020 Assets:PettyCash   (if your treasurer operates a petty cash tin for
small payments)
1200 Assets: Accounts Receivable

2000 Liabilities    again a top level placeholder account)
2100 Liablities: Accounts Payable       ( if you purchase items for the
troop on credit or receive invoices from vendors)
2200 Liabilities :Loans                        (if you borrowed money for  a
project for example- otherwise leave out)

3000 Equity:
3010 Equity:Retained earnings   (see tutorials for closing income and
expense accounts to equity at EOY )

4000 Income ( top level placeholder)
4010 Income:Membership Assessments
4020 Income:Overpayments
4030 Income:Donations

+ other income categories for fund raising

6000  Expenses:  (again top level placeholder)
6010:Expenses: Hall hire   + any additional categories which may be
appropriate

There is a standard account numbering used in businesses (see
http://strategiccfo.com/wikicfo/standard-chart-of-accounts/  for an overkill
example but this is a convention and unless it is a legislative requirement
you can just run with the Assets, Liabilities, Equity, Income  and Expense
as the names of your top level accounts and forget the numbers.  If you
reach the stage where your scout group has investments and loans or
considerable assets, find a parent who is an accountant and coerce them into
the treasurer position. 

The other bit of required reading is to have a basic undersatnding of double
entry accounting ( when I mentioned transaction above they had at least two
components a debit to one account and a credit to another account and the
sum of the debits for a transaction must equal the sum of the credit) , e.g
the overpayment case above) and the specialized use of the terms debit and
credit. The Wikipedia entry for double entry accounting is fairly good and
easy to read and is a good basic introduction. If you then go to the
tutorials and user guides they may make a bit more sense.

Good luck

David Cousens

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