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Danceballet1
March 18, 2023
Question

How to record scholarship contributions

  • March 18, 2023
  • 1 reply
  • 0 views

Hello..I hope someone can help us record this properly. We are a small dance studio, and are using a desktop version of Quickbooks. For a limited number of students, we give scholarships, which are an expense for us (we are for-profit and don't receive any grants). Here's the problem we're having with Quickbooks: If we invoice the student account for the full amount due, and then record our scholarship contribution (as an expense account), then our scholarship contribution shows up as an expense, but the full amount of the invoice shows up as income on the P & L, ( and when it's deposited in the bank account it shows up as income again, so it's double income). But most of these are 100% scholarships, so the student isn't usually paying anything, so it greatly inflates our income.

But if we invoice the student account for the full amount due, and record the scholarship amount as contraincome, then the income on the P & L only reflects what they actually paid, but our scholarship contribution doesn't show up on our expenses.

Can someone help me understand what we're doing wrong in recording these transactions?
Thank you

1 reply

Rainflurry
Rainflurry
March 18, 2023

@Danceballet1 

 

It's great that you're providing scholarships to your students.  Just to clarify, are these scholarships to your own dance school?  If that's the case, the scholarships are not expenses.  If you give a student a $5,000 scholarship, for example, what has that cost you?  You have not incurred any additional expense in providing that to the student.  Your expense will be the possible lost revenue by providing free instruction to a student vs. a paying student (or additional payroll, utilities, etc.) so there's no additional expense to record - that is why recording this as an expense doesn't work.  Therefore, creating the invoice with an offsetting contra-revenue account makes the most sense.   

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Danceballet1Author
March 18, 2023

Thank you for your reply.  That makes sense.  We've been trying to figure out how to record it as an expense, because that's what our accountant told us to do (but didn't tell us how--maybe we need a new accountant!).  We'll just record it as contra income.  

 

Now we just need to figure out the problem of invoices & deposits both being recorded on the P & L as income,  basically doubling our income on the P & L. 

 

 

 

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buckkari
November 9, 2024

Did you figure the deposit thing out?  This should be an easy fix of receiving payments for deposits and instead of depositing to the bank - you deposit to undeposited funds account.  THen when you go to make a deposit those funds will show up as not deposited yet and you can click on them to make the deposit.

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