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Join in and write your own page! It's easy to do. To transfer cash from the operating account to the reserve savings account.ĭebit Retained Earning (an equity account)Ĭredit Capital Reserve Fund (an equity account) This means that every time you have a reserve fund transaction there will be two entries - one entry to account for the cash and the other entry to account for the reserve fund sitting in the equity section of the balance sheet.ĭebit Capital Reserve Savings (a current asset account)Ĭredit Operating Account (a current asset account)
Some businesses take the capital reserve funding a bit further and actually open up a separate bank account for the funds to ensure they will be available when needed and not spent on general operating expenses. Accounting Software Dealer,Sage 50,Peachtree 2014,Peachtree Complete,Peachtree Premium,Peachtree Quantum,QuickBooks 2013,QuickBooks PRO,QuickBooks Premiere,QuickBooks Enterprise,FREE DOWNLOAD,TRIAL VERSION,QuickBooks Point of Sale (POS),DacEasy 2013,Tally ERP 9,Inventory management ACCTIVATE,Customer Relation Management(CRM SAGE ACT),Digital Language LAB.With Warranty & Free Technical Support. All this does is set the funds aside for a specific purpose.įor presentation purposes, the reserve fund account can be a separate account or a sub-account in the equity section of your balance sheet. Generally, you debit retained earnings and credit the reserve fund (also an equity account). That said, reserve fund accounting is not complex. I developed my cheat sheet for exactly this kind of question. When questions like this arise, you need to stop and think your way through the transaction. Is that a balance sheet or a profit and loss item? They put "aside" a reserve fund for future major capital investments (5% of total income).