 In this presentation, we will record a transaction related to a donor pledge, however that donor pledge being restricted for the use of a construction project. Let's get into it with Intuitz. QuickBooks online. Here we are in our not-for-profit company or organization dashboard. We're going to start off going over to our Excel file to see what our objective will be. We're on the sixth tab now, so we're on the Excel file, the sixth tab. If we go on over to number four, we have a donor pledge for a construction project. So there's going to be a pledge promised to giving money, so that's a promise to give money into the future, but there's going to be a restriction for a construction project. So there's a pledge, but there's got to be a construction project, more a long term type of project here. The projected life is going to be five years. The projected start dates two years from now. So if the project was to start, the projected date is two years from this point in time, and therefore the discounted value is going to be the 96-160. So what does this mean? We have someone promising to pay in the future this 109-100. However, because it's not going to start until two years in the future, we can't record that full amount as the receivable, we need to report what we think is going to be the present value of the money. So if we were to present value the money, the actual current value, today's dollars worth of the money is going to be worth less in today's dollars. We're going to say it's worth then the 96-160. So we need to then record the receivable. We want to record the receivable for the full 109-100, the amount that has been pledged for us. However, we also want to recognize that the current value of that is not 109, but the 96-160. What does that look like from a journal entry standpoint? We're looking at contributions receivable, another just normal kind of receivable, the OS money 106-109-100 for the full amount. However, we're going to be increasing what is kind of like the revenue account, the contributions with the donor restrictions of the 96-160. So we're only increasing revenue by the 96-160. The difference being that discount, and we're going to have to put that somewhere. Where's it going to go? We're going to put it into a discount on contributions receivable, which will basically be a contra asset account. So what will this look like in terms of financial statements? We're going to be increasing the receivable by the full amount, the 109-100, increasing the receivable. The revenue only going up by the 96-160, the fair market value of it, or the present value of it, that's going to increase the net income. And then we're going to say the difference is going to this discount on contributions receivable. Again, kind of a contra revenue account, it has a credit balance here, even though it's an asset. So it's kind of like an allowance for uncollectible accounts, in that we can now value the current receivable by saying it's at the 2-17-100 minus the 12,000, or the 204-160 after this transaction. Or in other words, the actual value is the 96-160, even though we expect to receive the 109-100. So we want to be able to put this into our system now. So this is our objective as we put that in the QuickBooks, is of course to increase the receivable, record that discount on the books, and be able to record that income at this amount, and also track that project that we're going to be looking at in terms of this long term project. Now obviously this is more of an unusual type of pledge that we might get from our type of organization, may not happen all the time, but when this does happen we're going to have to think about, okay well how could we set something like this up in our system. So let's go back on over to QuickBooks, and this is going to be a pledge, in essence it's going to be a pledge, not money that we have received yet, and therefore the form that we're going to use is going to be our typical reform for a pledge, we're going to enter the plus button, that's going to be an invoice as opposed to the sales receipt. So we're going to record the invoice, that's what is going to increase the accounts receivable, so whenever you think invoice accounts receivable, we have renamed the invoice basically to a pledge. Now we are going to need to put the pledger up top, so I'm going to put the pledger, and we're going to have a new restricted item. So let's actually, before we enter the invoice, I'm going to close out the invoice, and let's go into our sales tab, let's go into our sales and think of our customers, and then scroll down and say we're going to need another restricted item for this long term project. So I'm going to then go up top and say let's make a parent customer, so I'll say new, and I'm going to say that this is going to be a construction project or a long term project, let's say, I'm going to say it's a long term project and then restricted. So we can say it's a long term project restricted, this is going to be the parent category. Then I'm going to say save, so we'll save that there, I'm going to close the hamburger for now so we can see this a little bit better. I'm going to go back to the customers up top, so back to the customers tab, scrolling down, and there we have our long term project for the restricted item. Now when we set up a customer that says that they're going to give money towards that project, we could put them as a subcustomer. Now let's see that by actually recording or adding the customer as we go through the data input form, that being the invoice, and then assigning that customer as a subcustomer. So to do that I'm going to duplicate this tab, I'm going to right click on this tab up top, duplicate this tab so we have this customers field open, then go back to the tab to the left, and now let's enter our invoice. So I'm going to select the item here, the hamburger, go to the plus button. Now let's go on down to our invoice, which is going to be our pledge type of form. And we're going to have the pledge and we're just going to make a generic name for the pledge. So we're going to call it Pledger 2 and Pledger 2 here, we're going to have to add the Pledger. Now what happened here, it's picked up Pledger 2, and then we're going to have to add it. So I'm going to say tab, add it. Now I do want to look at the details because I'm going to have to put this into the subcategory. So I'm going to say okay I want to add this, but it's an invoice, therefore we have to have a subcategory of some field and we're going to put it into the long term project, the restricted item. So we can track that as the detailed items. Bill with the parent, no I'm going to say I want to bill this customer separately so we can send the invoice directly to the customer information by providing their information here and the billing address and so on and so forth. So I'm going to say save, and then there we have it. So it's going to be the pledge, the customer to long term project. We could enter the email address and then obviously populate that to the customer and send it out in that format term. We're going to say is net 30. I'm going to say this happens on 010720. That means the due date 30 days later would be 2-6. Then we're going to set up the items. So I'm going to set up the items and we're going to use our standard item which is going to be the pledge. So we'll enter our pledge here. Or actually this is the date so let's put the date one more time. Which is going to be 010720. So I'll put 010720. We're going to use the product or service of the standard pledge. So we're going to use the pledge item and the pledge item is going to be pointing to the income account that we set up last time which is going to be the restricted income account. Now note you might be thinking hey I'd like to set up another account for the pledge for the long term project. You could do that. However again you want to limit the amount of income accounts and typically put that more information in some other format some other report. That's what we're going to practice doing here. We're going to say it's going to go to the pledge. It's going to go to the restricted line item of income. And then we'll use our other functions to break out and give us the more detail that being the classes and the sub customers. So if we tab through this then we're going to use the amount and the amount is going to be. What's the going to be the amount here to go down to our journal and trade the 109 100. So the 109 100. So we'll put this here 109 100. Now the class we're going to have to set up here. We have the classes up top. We have restricted but then we have our subclasses. We need another subclass. So let's do that. I'm going to do that with the second tab we have open. I've got the other tab open. I'm not going to close the invoice. We're going to go to the second tab. We're going to go up to the cog up top. We're going to go to lists and then all lists. So we want to be in all lists. Then we want to take a look at the classes. So we're going to be opening up the classes in the all lists. We want something under the restricted area for the long term project. We of course in practice might have something more specific than long term project but for our generic purpose here we're going to put restricted long term project. Okay we're going to say new class. So new class long term project. So like I said you might have multiple long term projects. So you'd want to say this is what the project is. Project number something like that. But for our generic problem here we're going to say long term project. Make that a subclass of the restricted items. So subclass here then we're going to save this and there we have it. So now we have restricted and then long term project as one of the restrictions. Let's go back on over to the invoice then and see if we can pick that up in our classes. So if I go to the classes see if it then populated hopefully it pulled over for us. There's the restricted. There's the long term project. So that's what we want for the class. Then we need to add the discount amount. So I'm going to put this in the same in for same date 010120. And then I'm going to make a new item for the discount. I'm just going to call it discount and tab. So we're going to set up a new item which will be driving to another account. I'm going to make it a service item. So we're going to set up the service item. I'm going to copy the discount as the name. Put that down into the description as well. And then we got to make another account that it's going to be going to. So I'm going to select the drop down and we're going to be making this go to a new account which is up top new account. So it's going to go to a new account and this is going to be a little bit funny here because it's not going to an income account. Let's go into this discount on contributions which you'll recall is a Contra revenue account. So it should be going to here Contra revenue account. So I'm going to go ahead and see if I can copy this. It'll probably be a name that is too long to put in our item here. But note that it's an other current asset account. You might be thinking, hey, let's put it into an AR account. You could do that accounts receivable. But accounts receivable you always need to assign a customer and it can get and it can have some functions in it that can complicate things a little bit. And therefore I'm going to put it into the other current asset type of account and the allowance for bad debt. That's not quite right. But again, the detail line doesn't matter too much and I can keep it there for now. I mean, that's fine to keep it. It's not going to change anything. But the name should be discount on contributions receivable. It's not exactly an allowance for bad debt. We could have an allowance for bad debt and this type of account to Contra asset accounts related to accounts receivable. It's not going to be a sub-account. I'm not going to put it as a sub-account here and then I'm going to simply save and close save and close. So now we set that account up. We set the item up. Now let's save and close this and that'll set the item or completely setting up the item. We're going to put this in there for according to our journal entry. Let's see what this should be there for. I'm going to scroll back down. It's going to be the 12940. So the 12940. So let's put this for the 12940. And actually this pledge up here, we need to put this is going to the revenue. It shouldn't be the 109. It should be the 96160. So let's put that in there for the 96160. So then if we add those two up, we get to the 109, the 109100. That looks correct. All right. And then here on the class, we don't really need to class here because this is going to be a balance sheet account as opposed to an income statement account. So we should be okay. So what's this going to do then? All right. What this is going to do? It's an invoice. So it's going to increase the accounts receivable. The receivable goes up for the full amount, the 109100. Then it's going to be increasing given this pledge item, the revenue account for restricted income 96160. Then increasing that contra receivable account for the discount by the 12940. This increase will go to a contra account. So it'll be a credit balance in there, which will kind of decrease the actual total receivable. And then on the income statement, we'll have this item when we break out by restricted items, it'll be under by classes, the restricted class. So we can see that more detail there. And also if we run the report by customer, it'll break out the restricted item by customer as well. Okay. Let's check it out then. Let's go to the save and close and see if that is indeed the case. We don't have a class for this one, but that's okay. We shouldn't need it. So I'm going to say thanks for letting me know QuickBooks. But we're, I think we're good on that. So the invoice has been saved. Then we're going to go down to the reports and let's check out the reports. Opening up the balance sheet first. So a good old balance sheet, opening that one up and scrolling up top, changing the dates. We want January through, let's just say December 31st to zero, 1231 to zero, 1231 to zero. And then I'm going to go up top. I'm going to right click on this tab. I'm going to duplicate it. I'm going to close this tab. We don't need this class as one anymore. We've got too many tabs. And then I'm going to go down to the reports and let's do this again. This time for the P and L profit and loss or income statement. So we'll open that one up, changing the dates up top to January to December. So 1231 to zero. We will run that report. And those are the two reports. So let's close up the old hamburger, hold down control, scroll up a bit, get up to that one, two, five sweet spot we like to be at. And then if we scroll down on the income statement, we are going to see that in the restricted items, the two, oh four, one, sixty, if we go into that item, then we see the long term item that we just added. And that's for, for the 96, 160 is the amount that goes into it, scrolling back up, going back to our income statement on the balance sheets side of things, closing up the hamburger. We should see in the receivable, if we go into the receivable, the AR, going into the accounts receivable, we should have the full amount, the full amount at the 109, 100. That looks correct. Scroll in back up that of course is an inventory type of form. And we see in the other current assets section, the negative number, right 12,940 because it's, it's a negative receivable and that's these two net out. So if we go into that item, of course, we will see that same in invoice as well scrolling back up. Let's go back to the income statement now considering considering it from a by class setup. So if we're going to go by class, if I set the dropdown and say I want to check this thing out by class, run that report, our good old class report, then we have the restricted items within the restriction, there's our government grant, there's our long term project. So there's our long term project, the time restriction, and here's the total restricted items. So again, if you compare that to what we would like to see in a step by step project or format, we would like to see it broken down here, restricted, non restricted, and then give us the detail of the restricted and non restricted items. So if we do that, we would like to see just the total restricted, and then the total non restricted or unrestricted, and then this unspecified area is going to be into one of those two categories once we once we allocate the expenses out at the end of the day. We can't do the collapsing here, but we can collapse in Excel by using the the hide feature. So that's that's one format you can you can take a look at. So I'm going to actually copy or duplicate this tab again, right click and duplicate this tab. So now we got that P&L to the left going to go back to the tab to the right, open up the hamburger again. So let's open up that hamburger. I want to see the meat of the burger. So we're going to go down to the reports, down to the reports. And then we're going to go into that P&L again. So we'll go into the profit and loss again, and scroll back up top the dates should be okay I'm going to close up the hamburger so it's going to be for January is covered so we're good there. And then I'm going to select the accounts now by customer. So now we're going to run the profit and loss by customer and run that report. So again, this is the second way that we can kind of do this. We're doing it in two separate fashions. Notice here you've got the government to the government grants. That's going to be one of those restricted components, the government grants and then the totals. So any any area where you have the total item, that's where we made a sub customer and that's where we have the restricted items. Then we have the long term restricted and then of course the long term restricted items here and then the time restricted and the the total restricted here as well. So again just note that if you wanted to to run this report if you if you take a look at this report you can this is the profit and loss by class if you didn't want to have the restrictions included in here you can you can remove the restrictions and then do it in that other fashion and you can export these reports and then and then trim them down fairly easily with Excel. So we did that with this report. Let's do it with the other one this time. So here's the restricted items total restricted items add up to the three six three one sixty. If I go back over here and we look at our our total restrictions the total restricted items we're going to we can filter this I'm going to filter this report up top. We'll then go into the customize so we're going to be customizing the report we're going to scroll down and we're going to be taking a look at the filters so we want to take a look at the filters. So here is the filters if it if it's not expanded you're going to say I want to look at the filters we want the customer filters checking off the customer filters that'll bring it up top here then you'll select the drop down and you want to choose anything where you have like we have the sub customers which means there's going to be a total line. So the long-term project notice that we have the long-term project long-term project and then the restricted time restricted time and we had the government grants the government grants. Those are going to be restricted items and restricted time and there we have those so that should be it I'm going to close this back out then run this report and that'll remove all the non-restricted customers then if we were then to take the total over here we're going to say now we're at the 363-160 if we compare that to the P&L on that by class profit and loss by class then that ties out to the 363-160. So again if you imagine we only make an item over here by class just calling them all restricted putting them all in one column of restricted by class then you could see the breakout in this format if that's how you choose to do that by going and then running this report that would tie out to that total column. So we're doing it both ways here and then you can further break this report down and trim it down if you so choose by exporting it to excel so I'm going to go ahead and do that real quick we're going to say all right let's say we export this to excel so I'm going to bring this out into excel and then we'll do our standard formatting here what I'd really like to do is collapse this down to just basically the total columns for all of our all of our classes so I'm going to say all of our sub customers so I'm going to go here I'm going to get rid of the merged cells by going to the home tab alignment removing the merge nests the merge nests needs to be removed used to be unmerged and I'm going to do that for these three so it'll be easier for me to kind of hide columns and whatnot so what I want is this total column this total column and that's a total column right so what I can do is just hide these these cells I'm going to say I want to hide those and just please hide them so I'm going to highlight these columns and then I'd say like hide these and notice this would be a nice collapse feature that it would be nice if you were able to collapse them on on the report but you know it is what it is so you can hide these out and then then you can see these add up across so if I was to add these up they'd add up to the 204 160 adding up the totals adds up to the 363 160 so you can see this will give us a another kind of detailed report that we can give to somebody so you could break out this report you can imagine breaking out this report hold on a second in the p&l you can you can do a similar fashion to this report breaking out and you just want the restricted and then the unrestricted and then giving the more detailed report about the restricted items which would be something like this you can say hey look this is the more detailed report on the restricted items again if you wanted to put to read redo the headers and put them across the title I would do it this way you could go to the home tab and merge the cells again I typically like to go right click on this and use the alignment feature so so format cells and then go to the alignment tab and then we go to the horizontal alignment and I like to center across the cells and I think that that gives you less problems when you want to do things like hiding cells or deleting cells because you don't have that merged thing going on so in any case that is that that's going to be it for now let's get out of here