Hi Mark

As a Property Managing Agent I have a Reserve/Sinking fund amount for each property under management. This amount is not held in a separate bank account necessarily. If it is the problem outlined below wouldn't arise.

I can set this account up under Owners Equity as 'Reserves' & 'Reserve Drawdown'.

I can see that I can invoice the Leaseholder & allocate the amount to 'Reserves' & receive payment in the normal way & bank it.

My difficulty arises when I receive a Supplier Invoice. EG. Surveyors fees allocated to Expense account 'Professional Fees' & paid in the normal way through the Bank account. How then do I show that the fee does, in fact, represent a 'Reserve Drawdown' without setting up a sub-set of accounts?

Regards

Neville

Hi Neville,

If I understand correctly, the property owner is incurring the surveyor costs, not your business. In that case when recording the surveyor fees just allocate to the 'Reserve Drawdown' account instead of 'Professional Fees'.

Regards,

Hi Mark

I'm sorry I haven't explained it correctly. I keep a separate set of Maintenance Account books for each property. As Manager I charge a fee to that account.

Reserve/Sinking Funds are there for major repairs such as re-pointing, new roof, etc. I need to clearly show that monies are going into & out of a Reserve Fund. When major repairs take place the monies come out of the Reserve fund and not out of the day to day management fund monies. I need to categorise the spending.

I hope that makes it clearer.

Neville

Hi Neville,

I think I understand. In that case I would record a purchase allocated to an expense account (as you have described), followed by a Money Received transaction from an income account to the reserve drawdown account. Does that work?

Regards,

Hi Mark

After thinking about this for some time I believe I have found a solution. This is what I have done:

1. Created a new Equity Group Account called Reserve Account. Created two new accounts within the group a) Current Year Reserves & b) Retained Reserves.

2. Created a new account called From (Retained) Reserves in the Income Group.

3. Created a new Expenses Group Account called Major Works. Created two new accounts within the group a) Repairs & Maintenance & b) Surveyors fees. More accounts can be added depending on how detailed one wants the expenses to be.

The P & L and Balance Sheet now show quite clearly Reserves collected, breakdown of monies spent & how they were financed, ie. From Reserves. The From Reserves account balances the Major Works account leaving the day-to-day Income & Expenditure unaffected.

I hope this makes sense & helps others.

Regards
Neville

Hi Neville,

Yes that should work. Thanks for sharing your solution.

Regards,