 In this presentation, we're going to record a transaction related to net assets being released from restriction. Get ready because here we go with zero. Here we are in our not-for-profit organization dashboard. We're going to be jumping over to Excel to see what our objective will be. We're currently in the tab 10, last tab on the worksheet. You'll recall in prior presentations, we've been entering data basically in a journal entry format recording that information to the trial balance. In the trial balance, you'll see that we don't have those two columns as we do have in the statement of activities and therefore we had to break things out such as the expenses down here and they're in there by nature, how we would normally see expenses in the expense categories that you would typically think of with regard to expenses, rent, salaries and so on and so forth. You'll recall we made another worksheet breaking it out by both nature and by their function. If we were to do that in a trial balance worksheet and we won't go through the process because the accounting software will help us to do that, that's what the functions will help us to do, but if we were trying to see this in a worksheet such as this and build the reports in Excel, a two-dimensional kind of worksheet, we would have to take then these expenses. For example, I took these ending balances over here and then pulled them into our beginning balances in this worksheet down below and starting in cell P35 and then we took this information and then recategorized with this journal entry. You can analyze this worksheet if you so choose, I'll give it to you here, but we took it out of the expense items that were by nature and then allocated them out to the expense items by function, including the two programs and the management in general. Now we're going to be down here and working with the second trial balance to do the next transaction we're going to be thinking about here. This trial balance, now this is a way that we can see once again a trial balance breaking out expenses by nature up top and a trial balance breaking out by function on the expenses down below. We're going to record this item to this second trial balance. Now the next thing that happens is we're going to say that some items were released from restrictions and we're going to say that the released item from restriction was for the government grant items, which we spent money on, we're going to spend money on education. So given the fact that we're spending money on education, that's going to release money from a restriction because now we've complied with that restriction, we're going to release the money. So anytime we can spend money or anytime we do spend money in such a way that it's going to comply with some kind of restriction that is in place, our assumption is then that we spent the money out of that money so that we can release the restriction. In other words, our goal as the not-for-profit organization is of course to release the money from restriction whenever possible so we could spend the money in whatever way we see fit as much as possible within the confines of our objective, which is generally the programs that we need to have. So we've got to release it from restriction. Now to do that in this two-dimensional kind of a field, we're going to say we spent $128,504 in something that's going to be able to release money from restrictions and we're going to use two accounts that look very similar, very long names here. Fit assets released satisfaction of purpose restriction without donor restrictions, same name with donor restrictions. You can think of these like as I would think of them as like income accounts and income goes up with a credit balance. So the one that has no restriction is now going up, the one without restriction because we're releasing it from restriction so we're crediting it, increasing it for an income account perspective or decreasing an expense, in other words decreasing net income or increasing net income and then on the other side we're going to say the one that was restricted with restriction is going to be going down if you're thinking about an income account or you could think of it as an expense kind of account. In other words net income is going to be going down from this one so increase in this one, decrease in this one, no net effect on our net income from a total perspective so no net effect here but when we break it out to our two columns it'll be broken out within the two columns in the statement of activities. So when we see this in a trial balance format we need two accounts to represent it so that we can then use the trial balance to construct the statement of activities but when we see it in the statement of activities then we can break it out and you'll see here we've got this net assets released from restriction satisfaction of purpose and the one without donor restrictions unrestricted that the good one that we don't want restrictions is going up on the income side and the one that has donor restrictions is going down so the donor restricted items are going to be decreasing and so we're going to record this in the current period and of course these net incomes or the total the change in the net assets is going to be then rolling over to the equity section basically on the balance sheet statement of position. So that's going to be our trend now note here also that we really only need one account if you if you have this breakout now obviously we're going to be breaking this out in our system in zero by using the classification function so really we only need one account and then to assign them to their proper classes I'm still going to make two accounts however because I like that kind of balancing method because that helps us to gives me like a double check on it so I would still create two accounts and you can group them together using zeros formatting for formatting purposes if you so choose with the really flexible reporting functions they have okay so let's go over and see how are we going to do this within zero so I'm going to go back on over to zero and then we're going to do this with a journal entry so we can do it here with a journal entry so I'm going to select the accounting drop down we're going to go into our reports and again I'm looking in the reports not for an actual report but I'm looking to get to the journal entry so I can enter some debits and credits here we're going to go down to the general journal we're going to say add new journals so we're going to be adding a new journal which is basically a journal entry debits and credits and we're going to say that this is going to be I'll just call it release from restrict John and this is going to be education government grant and then we're going to say the date on this thing let's just put it as if the somewhere closely in the year here I won't look up the date we'll make it as of January into the month here somewhere close I'll pick at the 30th doesn't necessarily this isn't an adjusting entry necessarily here so this is could be any time in the month there's no alright and then we're going to go down so that populates down here that looks good now of course we're going to need a new account here so we're going to need a new account and we're going to say the one that was released without doing a restriction so I'll make this account name something similar to that I'll shorten it up once we get here but we're going to have to make a new account and it's going to be some kind of income I'm going to put it on the income side of things so we want to make it somewhere in the revenue or income or sales area so here let's put it let's put it under the service it should be on the bottom probably so let's make it 4 3 5 0 4 3 5 0 so I'm going to go back up top and say I want to make a new one and I'm going to make the code to be 4 3 5 0 the account type sales type of account let's make it a sales type of account scrolling down sales type of account and then I'll put that huge name here and I'm going to say really I wanted to be net assets released and let's just say net assets released and then say this is going to be the restricted because this is going to be the debit one that's restricted and then the unrestricted is a credit so I think that's what we need I think that's it so I'm going to say say well let's just copy this whole thing now because I'm going to do this again except the next one's going to be unrestricted so I'm going to say copy that and then save and then on the next one let's put the next one in there while I'm thinking about it this one's going to be another account like we could put it in a same account net assets released and then again use the classes but I'm going to make two accounts just just we I mentioned that before I won't say it again and then I'm going to say the drop down and we're going to go to new account and this one's going to be the number is going to be four three five two let's say so I'm going to say new account number four three five two and then the name is going to be that but then I'm going to say it's unrestricted unrestricted and then the type is going to be a sales type of account and then that looks good so I think that's good I'm going to save that so there we have that and then once we go into the restricted and unrestricted I'm going to say that this one is going to be this is going to be the well the debit's actually the restricted one this one's the restricted one and I'm going to put it into the government grants for the education so it's going to actually come out of there because it's a debit it's going to be decreasing that item and then the amount was four see the amount was four one two eight five oh four so we're going to say the amount one two two eight five oh four and then the unrestricted I'm going to put all the unrestricted into the fundraising when it's the income on the income side of things I'm just going to put it into unrestricted fund rate one two eight five oh four so alright so there we have it that looks good that looks good everything looks good okay let's go on down and post this check it out so we'll post this out and then we're going to go into our reports and see what has happened with it so then we're going to go up top and go to the accounting drop down let's take a look at our income statement let's look at all all four of these income statement type reports so let's open up the income statement and there we have it then I'm going to right click on this tab duplicate it then I'm going to go back to the tab to the left and let's open up our income statement worksheet so I'm going to hit the drop down though these are the ones that we made so we made these in prior presentations it was good times if you missed those you can go back in and and check those out so we're going to look at the income statement worksheet and then I'm going to duplicate this tab once it pulls up again I'm going to hover up on the on the tab up top right click on it duplicate it then go back to the tab to the left again we'll do this again we'll hit the accounting drop down we're going to go to the restricted items worksheet it's going to the restricted items worksheet again another altered income statement for the restricted items we'll see how all these tie together as we go practicing that process right click it on the tab up top again duplicate in the tab going back to the tab to the left accounting drop down so we'll go to the accounting drop down then we want the unrestricted worksheet unrestricted worksheet so there we have it so we in income statement the income statement worksheet the restricted items and then the unrestricted items okay let's go back to the tab to the right here's the actual income statement so if we go down to the income statement our new items are here just as we saw in the worksheet we see one going up and one going down notice their income type of accounts if you got the debits and credits wrong then you know obviously just you could just reverse it right here here you see it in the plus and minus format where the unrestricted item is going up from an income perspective restricted going down no net effect down here no net effect we're just showing that that release from the restriction that's going to flow through basically the total equity section so okay so then we're going to go then to the worksheet let's go to the second tab to our worksheet and here we see it broken out with regards to the unrestricted so the unrestricted is now decreasing and we don't see the item on the restricted side yes we do what am I talking about here so we've got the unrestricted here so 128504 is increasing on the unrestricted because they it came out of the restriction is now it's now unrestricted and reducing the restricted side so this little worksheet up to the total column is going to be similar to our statement of activities which is now breaking this information out in this format again note that we could have just used one account called released from restrictions right instead of using two accounts here but the two accounts gives us kind of that double check that it's going to be that's going to be deleting out now also note that if you wanted to see this in one account you could then for external reporting purposes again if we wanted to make an external report you can edit your report and I would make an internal and external so this is something we might do when we get to the editing of the external reports but if I then hold down control and I'm shifting I'm going down so we can see our activity and if we went to the restricted and unrestricted if I was to take this one and hold down control and take both of those and then say I want to group that into just one group which I'm going to name net assets released from restriction and then say okay and then I want to I want to pull those into that item so then now those are going to be grouped together so then I can say alright done that assets really I won't save this item so next time I pull up this worksheet it won't show this way but this is some one way that you can you could get the more detail and have that grouping and again this is similar to like sub accounts so you can kind of do this and like a quick books online but the flexibility you have with it here is pretty pretty nice so now it just it shows up in that one line item even though we have have two reports that's kind of like a sub account type of activity if I wanted to expand them I would just go to the edit tab and then hit that little triangle to expand them back out and then we can see it in that format as well I'm going to hold down control scroll up just a bit and then if we break out this information to the unrestricted and restricted if I go into the restricted items here so within the restricted items scrolling down the rest the actual item that was unrestricted was with regards to the government grants so now we see the government grants here we see the restricted item with regards to the government grants so now we got this item that are still restricted the thirty thousand four ninety six so now we're showing the actual items that are restricted and note that this ties out this to to the the end result here because I'm using I'm looking at the same accounting period the two thirty four six fifty six for our three restrictions grants time long-term projects two thirty four six fifty six ties out to the income statement where we have the two thirty four six fifty six and the restricted items back to the this one also note that if you this would also tie out to the balance sheet and well let's check it out if we go if well we can't see it right now but later on we'll take a look at the balance sheet but just note that when we tied out to the balance sheet we're gonna have to change the date range to the life of the restricted item and then that and then it will show an item that will tie out to the balance sheet item for for the restricted accounts so the sum of all restriction accounts for the life of the of the restriction should then be tied out to the balance sheet accounts which will have two of them after we make an adjustment for them which will show the restricted and unrestricted items for the for the kind of like the equity section or the net assets section of the balance sheet then if we go to the unrestricted again if we go back to this income statement now we're looking at the unrestricted which is this this gross profit of the three sixty five five oh four that's gonna be covered by this worksheet the unrestricted items and there's the we put it into fundraising and if I scroll down we get the net income the 301 252 actually let's take a look at that bottom line number on the if I take a look at the unrestricted bottom line number on the net income we're getting a total of 44 244 if I go back to my worksheet over here and we take a look at the total column which is this one the 44 244 for the unrestricted alright so then I'm gonna go back on over here so there's there's the detail there now the thing we changed is the income side of things and notice that typically we're looking at the breakout here we just put it into into fundraising so typically we'll put you know the default setting when the income is going up is to put it into basically the fundraising category unless there's you know specific activity on on the other categories here usually I mean the main purpose of this report the requirement of this report is to break out the expenses down here down below as we saw in a prior presentation both by function and by nature so but in any case this report of course will then tie out to the the income statement worksheet report as well but it will tie out to the unrestricted column so that's gonna be it for now let's get out of here