Accounting for reserve transfer

Started by KathleenC2 • 5 replies • 5829 views

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KathleenC2 (New Mexico)
Posts: 3

Posted:

We are a New Mexico Condo Assoc. We use Quick books. We are going to transfer funds from our operating account to our reserve bank account. I will use bank transfer to record the transaction. My question - I need to debit reserves (expense) on the P & L - what is the credit entry? It can't be Reserve revenue as it has already been accounted for in our HOA dues revenue. Any comments would be appreciated.

JeffR7 (California)
Posts: 251

Posted:

You can do it one of two ways. Enter it as a transfer [Your Reserve Account]. it will show in your ledger but will not show in your P&L.

Another option is to create a new expense account called "Reserve Transfers"

Record it in your operating accounts as Reserve Transfers and immediately record it in your Reserve account with the same expense account.

Reserve Transfers will zero out and you'll have all needed entries in both accounts.

KathleenC2 (New Mexico)
Posts: 3

Posted:

I need the reserve transfer to show up on my P & L - otherwise it looks like we made a big profit (which we did not). What if I debited Reserve Transfer and credited Reserve Equity? Thanks for your input.

MoM1 (Massachusetts)
Posts: 56

Posted:

Equity accounts are only found on the Balance Sheet. If you need to avoid looking like you made a "profit", Jeff's method is the best.

KathleenC2 (New Mexico)
Posts: 3

Posted:

We are not using fund accounting. If I debit Reserves Transfer when I transfer the money and credit it at the same time I just wipe it out and it won't show on my P & L. Thanks for the feedback.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Create a chart of account name/number for the Reserve Fund in your checking account under INCOME, maybe even as a sub account of Misc. Income.

1001 - dues revenue
1002 - misc. income
1002A - Reserve Fund
1003 - Petty Cash

Simply transfer the amount from the Reserve Fund to this account in the checking account. It then becomes part of the checking account and the line item will show up in a P/L but not in a balance sheet, since you moved the funds into the checking account.

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