How to classify member stock fees and then how to classify them being paid out

@Swimhole 

I've never heard the term "stock fee" used to describe what sounds like a refundable deposit.  Is there a distinction between the two?

The proper classification of customer deposits varies depending on several factors.  In this case, because you do not have complete dominion over the funds (the member can request it back in cash anytime), these should be recorded as a liability when received.  Create a "Member Deposits" (or something similar) other current liability account.  If you invoice members, you can create a service item called "Member Deposits" and map it to the new liability account.  Then, add that item to the customer's invoice and receive the payment.  This will add the $300 to the liability account.  When the member resigns their membership, create a refund receipt for the same item/amount.  This will remove the liability.

If the member resigns their membership and forfeits their deposit, create a journal entry: debit the member deposit liability account and credit an appropriate income account. 

You are a rockstar!  Yes, the stock fee could be compared to a refundable deposit.  The $300 stock fee is the essential cost of stock ownership in the pool.

It appears stocks fee that were forfeited in the past years were never done the way you described.  Should I figure out that amount and do a journal entry for that amount?

Thank you so much for replying!!

@Swimhole 

OK, so the stock fee sounds like member equity, not a liability.  Therefore, change the account and the item info in my previous post to an equity account and use "Member Equity" instead of "Member Deposit". 

What type of organizational structure is the pool?  Co-op?  Forfeited member equity is not always taxable income.  Do you have bylaws that explain how to handle forfeited member fees?

Hi - Yes, the stock fee would be equity (member equity). I did recently set it up like this. Yes, co-op with a board of directors. It is stated in the agreement the member signs,"If you have not notified treasurer in writing of your intention to withdraw your membership, you will forfeit your membership and stock fee." 

I recently did change the "stock redemption" to a long time liability/shareholder notes payable.  That however, did not show the resigned accounts where I had issued a refund receipt.  

@Swimhole 

I think this is something to run by the board of directors to confirm.  It's important to differentiate between a stock fee and the cost of the member's ownership share in the co-op.  The term stock fee is just that, a fee (income).  When you say stock fee, do you really mean that is the cost of the share ownership the member pays (equity)?  

If so...cooperative equity is generally either allocated (to a specific member) or unallocated (general fund owned collectively).  When a member forfeits their share, it reverts back to unallocated equity.  You would journal entry the forfeited share by debiting member equity and crediting unallocated equity.  There is no liability or income reported at all, it's just a shift from unallocated equity to allocated (when the member joins and pays) and then moved back from allocated to unallocated upon forfeiture of their share.  All outstanding forfeited fees should be entered as unallocated equity. 

Hi - We are set up as a corporation and all members enjoy use of the pool and have ownership.  They have one vote per family and they purchase a stock (equity) that is refundable when they resign their membership. They get a check back for $300. We do operate like a co-op, but I can tell you I have never heard anyone use that word or describe the business as a co-op. 

For 20 years the stock fee was tracked as income. The return stock fee was setup as an expense.  When a member redeemed their stock, a check would be written. Originally thinking the stock fee should be set up as equity/owner's equity.  Is this the same you are saying. I apologize, not 100% sure how to set up equity allocated and unallocated equity.  

Thank you again!! You are such a big help!

Thank you again, rockstar! You have been an immense help and brought up some good points. I agree on the next steps. I appreciate all your time spent talking this through with me.