Use of the "Fee " category for expenses

Mike Taylor on

Hi all,
we held a Xmas party, the club paid $500 and asked members
to reimburse $50 each (10 members), which is all completed..

I put the party down as a $500 non-deductable expense, and
then used the "fee" category for each member who paid back
the $50.

However, I think this is an "uh oh"... I recently checked
member performance and noticed the $50 appearing alongside
regular monthly payments. Should I have used the loan
account instead?

thanks for helping!

Mike

Rip West on

Mike,

There are a few missing parts of the puzzle here. How did you allocate the non-deductible expense? Equally, or by units owned? If you allocated the expense equally, you should NOT record the receipt of the assessment as a fee, but as a regular member payment for which units are awarded.

You also used the terminology, 'for each member who paid back the $50'. Does that mean there were some members who did not reimburse the $50? If so, again, you should not use fees to record the receipt of the reimbursement. Actually, you should not use fees to record the transaction, no matter what the facts are. You should record the receipt of the reimbursement as a regular member payment for which units are awarded. Then, when you allocate the party expense, you have to decide if you want the expense to be allocated equally by partner or by unit.

There is no need to use the 'loan' account. Just record the reimbursements as regular payments, and then decide how you wish to allocate the burden of the expense - equally or by unit.

Rip West
Saint Paul, MN

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