Recording HOA Reserve funding in Books

Started by JoshuaC3 • 3 replies • 647 views

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JoshuaC3 (Texas)
Posts: 1

Posted:

What is the best way to record Reserve funding? (using Quickbooks desktop). We have begun to take $250 a month from the operating account (funded by regular assessments) and put them into a separate bank account designated as the reserve account. I have already setup the new bank account in QB and transferred the $250 from the operating account into the new reserve account. Should there also be a debit to the Reserve Contribution Expense Account for the $250 (to show it was not taxable income) and then a credit somewhere just not sure what this credit would be (perhaps a reserve fund equity account). We have always used a single column balance sheet and P/L statement, not really showing fund accounting financials previously.

TIA

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Josh

I am far from a financial person but to me but the monthly contribution to a Reserve Fund is the same as any other "paid" expense. The only difference is somewhere in your reports, you need to show the total amount of the Reserve Fund.

TimB4 (Tennessee)
Posts: 21,059

Posted:

It's an expense to the operating account and a deposit/addition to the reserves.

Opposite when paying for a reserve item expense.

Have you done a reserve study to determine if what you are setting aside enough?

SusanH31 (North Carolina)
Posts: 69

Posted:

Same question here, of how to handle reserves in Quickbooks. Until 2022, our dues covered a master insurance policy and maintenance dues but no reserves. Those were listed as separate items on the homeowners' invoices, and in January we'll add reserves. For example:

Insurance: $70
Maintenance: $118
Reserves: $64
----
$252

Should I create a Quickbooks equity account for Reserves, total up the amount per month, and transfer it from our Operating bank account to Reserves bank account and QB equity account? Or is the Reserves bank account's existence in QB enough?

(Not pertinent to the accounting questions here, but yes, my HOA did have a reserve study performed.)

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