Equity Release Scenario

[Lori Wright]

Ok, here is the scenario.
We have a Columbarium Garden (cremation cemetary). We sell the niche (a place in a wall for ashes) for $750.00. When the money is received, we will be crediting unrestricted income for $625 and debiting cash. We will credit restricted income that closes to the restricted equity account and debit cash in the amount of $125. The purpose of this is to set aside the money we estimate it will cost us when the brick mason comes in and opens the niche, installs the ashes and close up the ashes in the brick wall.

I now have a bill for $100 from the brick mason. I plan to credit cash and debit the new niche maintenance espense that closes to the restricted equity account. I want to release the restriced equity account in the amount of $125 because I don't need to hold on to the extra $25 any longer. What will that do to my BS and IS? Will something be thrown off if I release more than the actual expense?

[Jeff]

Lori,

If you release more than what the actual expense is you won't have a problem. Your transaction would look like the following:

Credit bank account $100
Debit Niche Expense $100
Credit Unrestricted Release $125
Debit Niche Restricted Release $125

What this transaction does is expense the $100 and tells the system to no longer consider the $125 as restricted money. (Note: To make the release part of the entry, just select the Release Restricted Funds button, select your restriction and enter the $125 amount. The program wil add those 2 lines to the transaction automatically)

I hope that helps.