When a member returns a check to the church with void written across the face to be used as a donation...
A check which was written to a member is most often a reimbursement for expenses the member incurred while helping with a church function. The transactions recommended below are based on this assumption. If a different account was used to offset the cash account, substitute that account for the expense.
If the member returns the check having written the word void over the face with the intention of using it as a donation, this can complicate your bookkeeping. You can normally simply follow these two steps:
- Void the check as of today
- Add a journal entry dated today which Debits the Expense Account (used in the original check) and Credits the Income Account for the fund the donor wants to give to.
Note: Another step may be needed if you use contribution software to add the donation for the member which also updates the accounting program.
Transaction theory: How we arrived at the above transactions
Normally the check would have the following effect on the books:
| Debit | Credit | |
| Write check | Expense | Cash |
| Date under Accrual | date of bill | date of check |
| Date under Cash | date of check | date of check |
Here are the steps you may follow so your books reflect the steps you must take to ensure everything is in order:
Void the check as of the current date (this will debit cash and credit expense both on the void date)
| Event | Debit | Credit |
| Void check | Cash | Expense |
| cash or accrual | date of void | date of void |
- This will show that the cash was never withdrawn for the check (true)
- But this will also show that the expense was not incurred. This is not true and must be handled through a journal entry which will be addressed in the next step.
The other update to the books that you will need to see is the deposit made by the donor to the fund of their choice. This involves two parts:
- a withdrawal from the bank (representing "giving the cash to the member" so they can turn around and "give it to you" for the donation)
- a deposit to the bank distributed to the correct income account for the donation
- adding the expense back in which was removed when the check was voided
If the withdrawal and deposit are to the same bank account on the same date, you can omit that part of the transaction.
| Event | Debit | Credit |
| "Withdrawal" funds to use for the donation | Cash Account | |
| "Deposit" funds for donation | Cash Account | |
| Journal Income (for Fund) |
Income Account | |
| Journal Expense (to ensure original expense is recorded) | Expense Account |
So, assuming there is only one bank account in play, the only entries that are necessary in this journal entry are in green. The other entries just show how the cash account would be involved had the check been actually cashed by the donor and then handed to you for the donation or if two bank accounts are involved.
Updated