non-profit/for-proft shared relationship question?

Question

I am working with a non-profit company that made several large purchases and also took in income that is for a for-profit store they are starting. I have set up two seperate quickbooks accounts for the store and the non-profit but how do I show the expenses and income in the for-profit store if these monies were taken in and out of the non-profit?

Answer 1

The for profit is a separate entity from the not-for-profit. The NFP should only recognize the FP as an equity component and thus the FP should make capital contributions through dividends back to the NFP. Thus no income from the FP should ever be directed entered into the NFP GL, except for the cash that is distributed back (which could be 100% of the NFP's profits).