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J
JK Bookkeeping
April 7, 2022
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Opening Journal Entry Question

  • April 7, 2022
  • 1 reply
  • 0 views

I am setting up a new home owners community as of Feb 28th. I will continue March with my own entries.  

 

They have provided me with a basic excel with the Feb. 28th checking account balance, a couple of Reserve fund savings bank accounts, and various paid expenses from January and February. No retained earnings or equity etc. or outstanding AR or AP.  

 

I believe this should be simple but I can't remember how this opening JE is supposed to balance out when I enter these beginning balances.  There will also need to be a reserve equity account somewhere in there.

 

Thanks!

 

Best answer by Rainflurry

@JK Bookkeeping 

 

Agreed.  It would be nice to backtrack to Jan. 1 but that may be a lot of work.  If you want to start as of Feb. 28, here is my thought on the J/E:  Let me know if you think I'm missing anything.

 DebitCredit
CheckingXXX 
Savings1XXX 
Savings2XXX 
   Prepaid Owners Dues XXX
   Reserve Equity XXX

   YTD Operating Income (Debit if loss) - to balance

 XXX

 

 

1 reply

Rainflurry
Rainflurry
April 7, 2022

@JK Bookkeeping 

 

I have some experience as a treasurer for a couple of HOAs but am by no means an expert.  A few questions: 

 

  • Did the HOA give you a balance for the reserve equity account (replacement reserve balance)?  Is it the same balance as the reserve fund savings accounts? 
  • Is the checking account balance just operating assets or is it a combination of operating assets and amounts to contribute to the replacement reserves?  
  • How about YTD income/(loss)?  
  • Any prepaids or accruals?

 

Since there's no A/R or A/P and no retained earnings, I think if you have that information, you can set up the opening balances. 

J
JK BookkeepingAuthor
April 8, 2022

Thank you for your reply.  Here are my answers.  I was thinking it would be nice to add in the Jan & Feb. expenses so they can see the budget  with those included as well as the first two months assessment income.

 

Did the HOA give you a balance for the reserve equity account (replacement reserve balance)?  Is it the same balance as the reserve fund savings accounts?    I think it is just what is in the savings accounts.

 

Is the checking account balance just operating assets or is it a combination of operating assets and amounts to contribute to the replacement reserves?  All deposits go into it and then monthly transfers are made to the reserves. The current balance is after the Feb. transfer.

 

How about YTD income/(loss)? They supplied income and expense totals for the year.

 

Any prepaids or accruals?  Yes there are a few owner prepaids.

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