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Reserves Entry

• These entries transfer revenue from one index to another.
• These entries are also made to correct prior year errors found after yearend has closed.
• Reserves entries are ONLY used when all affected indices are unrestricted.
• Determining if this is the correct entry to make:
  • Are you moving revenue that is a reserves?  If so, actual dollars will be in account 1900.  If budgeted, it will be budgeted in account 1901.
  • Are all indices involved in the same Fund level 2 and Program level 2?
• You will move the money with account 1903.  The entry will have 1903 for both the debit and credit so the total activity for the account code is zero.  Both sides of a Reserves entry will always use account code 1903.  They will always zero out 1903.

Example:

 Mary Smith found a $14,000 equipment purchase error in one of her unrestricted indices.  It was made to the wrong unrestricted index [34xxxx] in the prior year.  She wants to correct both indices involved by moving the expense to the correct unrestricted index, 21xxxx.  Both indices are in the same Fund level 2 and Program level 2.

 Reserves account:

• Figure out which index has too much money.  In this case, Index 34xxxx has $14,000 too much expense.  They are missing $14,000 of money in their reserves account.  Had the expense been properly accounted for in the prior year, they would have had $14,000 more funding to carry forward.  This $14,000 of cash legitimately belongs to index 34xxxx, since they are the ones who actually paid for the equipment in error.
• Calculate what remains in the Reserves account of the index that must give up the funds:
  • To calculate what remains in the Reserves account, take the sum of 1900 and 1903.  For example, if there is $20,000 in index 21xxxx, account code 1900, but account code 1903 has -$8,000, you have $12,000 left in the reserves account code that you can move [$20,000 - $8,000 = $12,000] Note that the  +/- signs on revenue account codes are the opposite of the +/- signs on expense account codes.  This $12,000 balance represents money that can be spent.

• Current Balances in 21xxxx:

  Index	Rule Class Code	Account Code	Debit	Credit
  21xxxx	JE2	1900		20,000
  21xxxx	JE2	1903	8,000	_______
  Net of the two account codes:				12,000

• You need to move $14,000.  This is $2,000 more than you have in the Reserves related account codes.
  • First, move the $12,000 that you have in the Reserves account.
    • Debit index 21xxxx, account code 1903, for 12,000 [you have -$8,000 in there to start with].  You will now add -$12,000, for a total of -$20,000 when the Journal Voucher has posted.  This equals the $20,000 you have in 1900.  This is the most you can move from this account code.  Credit the index getting the revenue for $12,000.
    • Move the remaining $2,000 that you need to move with an allocation entry. 

• 
  

  Index	Rule Class Code	Account Code	Debit	Credit
  21xxxx	JE2	1900	12,000
  34xxxx	JE2	1903		12,000
  Effect of entry for the account codes:				0

  
  

  Note that the debit and credit for this entry into 1903 results in “zero” dollars being moved into or out of the account.  This must always be true of a transfer, reserves, allocation, or 8045 entry.

  Effect of entry on index 21xxxx:

  Index	Account Code	Debit	Credit
  21xxxx	1900		20,000 [existing]
  21xxxx	1903	8,000	[existing]
  21xxxx	1903	12,000	[this entry]
  Amount remaining in Reserves account codes:			$                   0

  
  
  Effect of entry on index 34xxxx:

  Index	Account Code	Debit	Credit
  34xxxx	1900
  34xxxx	1903		12,000
  Amount of funding moved to 34xxxx:			$12,000