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Subject: Help!! Preparing Balance Sheet
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MattP3
(Louisiana)

Posts:2


01/06/2021 1:43 PM  
Hi,
I'm hoping someone may be kind enough to lend their expertise on some questions I have on creating a balance sheet for our HOA.

Background:
- We are a very small 6-unit self-managed HOA. One of the units is being sold and the closing/title company has requested a balance sheet for the HOA.
- Our treasurer has no idea what to do as he doesn't have a financial background (and I'm not far behind him) and I'm trying to help out to put together the balance sheet.
- In the past, we haven't had to put together financial statements and with only 6 units and no shared amenities (i.e. no pool, etc.) keeping track of financials has been an issue (keep track of the $250/mo dues, monthly payments to lawn care company, annual termite bill, insurance bills and the very rare exterior painting, roof replacement, etc.

We know our financial position is not great and a dues increase is needed very soon (it's been a struggle getting people to approve it in the past, but it's become dire now).

Details:
- Our only bank account only has $2,513 in it. I'm considering this entire amount to be our operating fund since when I projected out a cash flow statement for 2021 we actually dip negative mid-year when some large insurance bills are due, but end the year in the green with ~$750.
- Dues are $250/mo for each of the 6 units ($18,000 annually)
- Lawn maintenance is $245/mo ($2,940 annually)
- Total for all 3 insurance premiums (fire/liability, wind/hail, and flood) is $16,043.
- Termite contract is $457 for the year.

Based on the above info, I drafted a simple balance sheet:

OPERATING FUNDS
Checking Account: $2,513 (note - current bank balance used here)
TOTAL OPERATING FUNDS: $2,513

RESERVE FUNDS
Savings Account: $0 (note - we actually don't even have a savings account, just the checking account under operating funds)
TOTAL RESERVE FUNDS: $0

MEMBER'S EQUITY
Retained Earnings - Prior Years: ???
Retained Earnings - Current Year: ???

Questions/Help Needed:
1. Does the above simple balance sheet (excluding the "???" in Member's Equity) look correct based on the Details I provided?
2. I know the balance sheet equation is Assets = Liabilities + Member's/Owner's Equity, however, I don't believe we have any liabilities (all bills are paid and up to date). It seems unintuitive to me that the Member's Equity (between prior and current years). Should total Member's Equity really equal $2,513?
3. Any idea how I would go about determining the amounts for "Retained Earning - Prior Years" and "Retained Earnings - Current Year"?

Many thanks in advance for any help/advice you may be able to offer.

GenoS
(Florida)

Posts:4242


01/06/2021 2:06 PM  
I think you're in over your head. You've got a title company asking for information you don't understand how to prepare. Going to an internet forum and asking the kind of questions you're asking probably isn't the best way to accomplish your goal.

You should hire an accountant or a bookkeeper. Given the very small size of your association, it shouldn't be that expensive.
TimB4
(Virginia)

Posts:17180


01/06/2021 2:19 PM  
Give them a copy of your written treasurers report to the board.

If you didn't have written reports, that needs to be fixed.


Basically a comparison of the adopted budget vs Actual as of mm/dd/yyyy

Attached is a spreadsheet of what we provided.

Hope it helps,

Tim

Attachment: 116195177171.xls

MattP3
(Louisiana)

Posts:2


01/06/2021 2:46 PM  
Thanks so much, TimB4. This is very helpful.
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