Discretionary Member Encumbrances
Mike or Penny Novack
mpnovack at mtdata.com
Thu Jul 14 13:30:25 EDT 2016
On 7/14/2016 9:46 AM, Aaron Laws wrote:
> In my personal books, my wife and I have discretionary accounts that are
> populated when we exercise or eat healthily. We then spend the money as we
> like. The money never actually moves from our checking account until it's
> spent. How should I be accounting for this in my books? For the two
> transaction types: populating the discretionary account and spending money
> from that discretionary account, how should they look? What type of account
> should the discretionary account be? Thanks!
I would handle this the same way I do for organizations that have
restricted funds without a separate bank account for each. You partition
the bank account. For example, here the bank account is checking.
1) Create a parent account named checking. The parent total will show
the actual checking account balance from the bank's point of view, what
you will reconcile against (old sense of that term).
2) Create a child account for checking. It is this account where
deposits will be made, checks written, bank charges and interest
recorded, AND transfers to and from the restricted accounts.
3) Create child accounts for these "discretionary accounts". You would
transfer in what has been "earned". You would transfer out when such
discretionary amounts are spent. When you are practiced with entering
split transactions to the point able to do two way splits need not be a
separate transaction.
Michael D Novack
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