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We have an HOA for a condo community. We collect HOA Fees, HOA Reserves We keep the Operating in the Operating checking account and then transfer the HOA Reserves to the Reserves Checking account.
Some months the Operating needs help covering expense so we need to "Loan" the Operating Account some money from the Reserves. All the Loans are due to be paid back within 1 year.
Because all of the funds are initially brought in as income - we cannot show the "Loans" as a Liability for the Operating account. We need to track these "Loans" and make payments back to the Reserve Account from Operating but I am not sure of what account(s) we would use to track these "Loans" and "Loan Paybacks".
Help?
Set up 2 new G/L accounts: Due From Operating Account as an Asset. Due to Reserve Fund as a Liability account. Then debit Due from Operating for the amount of the loan and credit Due to the Reserve Fund. When the loan is repaid, then debit the Liability account and credit the Receivable account.
Rick
rlharriscpa @gmail.com
Thank you Rick - so essentially this would still act as an Internal Funds Transfers to/from the Reserves?
I thought that I had read that because all of the funds are initially brought in as income - we cannot show the "Loans" as a Liability for the Operating account.
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