HOA Balance Sheet Items

Started by PegM2 • 3 replies • 1527 views

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PegM2 (Pennsylvania)
Posts: 10

Posted:

Our HOA Balance Sheet contains two items that I don't understand under the Equity section:
1. Members Equity: it is always a negative amount, every month. Should it be a negative amount?
2. Contra Reserve: that increases every month.
Can anyone help explain what these mean? I've been scouring accounting sources but haven't found a good explanation.
Any help or advice is greatly appreciated! Thank you!!

RichardP13 (California)
Posts: 3,868

Posted:

Member Equity is another name for Retained Earning. It is the profit or loss of the corporation on an annual basis going back to the very beginning, IF accurate records were kept.

Contra Reserve is your reserve account and generally will increase on a regular basis. It will show on your income/expense statement as something like transfer to reserves.

PegM2 (Pennsylvania)
Posts: 10

Posted:

Thank you for your response. Is it OK if both numbers (Members Equity and Contra Reserves) are negative amounts? Should I be concerned?

RichardP13 (California)
Posts: 3,868

Posted:

Member Equity/Retaining Earnings can be negative and the year will start and finish with the same number.
Right below that you should have net income, which is month-to-month profit or loss from the income statement. That will change monthly.

I would be concerned if the Reserve is going negative every month, unless there is another reserve account that has a positive number.

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