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barb007
August 28, 2022
Solved

Childcare subsidies

  • August 28, 2022
  • 1 reply
  • 0 views

Hello

I am doing the books for a playschool

We recently received funds from the Govt  which are a subsidy for two specific children at the playschool   Those families applied for the subsidy based on their income   We, in turn, write them a cheque for that exact amount sent to us by the Govt   
Would I enter that money as a liability since we owe it to the parents or as revenue ?

Thanks

B MacDonald 

Best answer by Leith
Hi B I assume the family has already paid the full amount up front and then has subsequently submitted the paperwork to be reimbursed? If that's the case, I would do the following entries: Receipt of money: into bank account, record as revenue Payment of money: print check, record as expense (probably as a 'below the line' Other Expenses' since it's not a normal operating expense of the day care) In this way, while you've recorded the revenue from both the family and the government, the money from the government is also recorded as an expense, offsetting the revenue from them, essentially becoming 0-sum for tax purposes. Hope this helps!

1 reply

Leith
LeithAnswer
August 29, 2022
Hi B I assume the family has already paid the full amount up front and then has subsequently submitted the paperwork to be reimbursed? If that's the case, I would do the following entries: Receipt of money: into bank account, record as revenue Payment of money: print check, record as expense (probably as a 'below the line' Other Expenses' since it's not a normal operating expense of the day care) In this way, while you've recorded the revenue from both the family and the government, the money from the government is also recorded as an expense, offsetting the revenue from them, essentially becoming 0-sum for tax purposes. Hope this helps!
B
barb007Author
September 1, 2022

Thanks Leith!   I appreciate you answering me.  That helped!

B

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