Need ideas on how to handle this transaction

epitomaepitoma Member Posts: 12

Hello! This question is for anyone who has experience with this.

I have a fix and flip business. I usually only have 1 or 2 projects going on at once and run them all out of a single business checking account. Because I really want to know stats on each individual project I am using the workaround of creating extra Accounts to keep track of each (which I will archive when they are done). Now I have a question about how to handle a particular transaction.

First, here's a really simplified example of what's going on with my Chart of Accounts.

Assets
Checking - Just a business checking account.
Escrow - This is an actual checking account run by the title agency. I don't have control of it but I made this account to keep track of the creds and debs that happen here. (First question actually, I made this account a Short Term Asset since that's literally what it is. Does that sound right? It's not technically a cash account since the funds in there aren't liquid).

Liabilities
Loan - Loan used to pay for the purchase and repairs of the flip. This is deposited into the escrow account above.

Expenses
Escrow Expenses - Title fees/Escrow fees/HOA fees/Insurance/Considerations etc. These are subtracted from the loan funds in escrow.

Here's what I'd like to know: The final transaction from the Escrow account is a deposit (about 5k) from that account to my Checking. It's not profit, but funds that will be used for repairs. However since I don't have control of that Escrow account, there isn't an imported transaction. There IS an imported deposit for 5k in my Checking account since I have that connected with Wave. So do I need to create a Journal Entry for that Escrow account transaction and delete the imported debit from my *Checking** account, Or do I need to create that Journal Entry and somehow link it with the imported transaction as a transfer?

Thanks so much in advance!
Daniel

Comments

  • Katie_SilkinaKatie_Silkina Guest, Unconfirmed, Applicant, Member, Administrator, Moderator, Employers Posts: 73 admin

    hey @epitoma sounds like you're on the right track here! To balance out your credits and debits, you can either create a new manual Escrow transaction (expense/credit) and link it as a Transfer to the Checking deposit or delete the Checking deposit and create a manual Journal Entry. Which workflow you choose depends solely on what's easier to keep track of these transactions in your business.

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