David Broxson Entech Rental Management Software Navigate ’08: Charting Your Course for the Future

1. Understanding the Balance Sheet David Broxson Entech Rental Management Software Navigate ’08: Charting Your Course for the Future

2. UNDERSTANDING THE BALANCE SHEET IN A TRUST/ ESCROW ACCOUNT, YOUR “ASSETS” MUST EQUAL YOUR “LIABILITIES”. THE ASSET/ LIABILITY RELATIONSHIP CAN BE PICTURED AS A SCALE.

3. ASSETS & LIABILITIES ASSETS

4. ASSETS & LIABILITIES LIABILITIES

5. ASSETS THE ASSETS IN ENTECH BREAKDOWN INTO TWO CATEGORIES MONEY NOT DEPOSITED & CASH IN BANKS ASSETS

6. ASSETS: MONEY NOT DEPOSITED INCLUDES: • CASH • CHECKS • CREDIT CARDS • OTHER PAYMENTS NOT POSTED AS DEPOSITED IN ENTECH

7. BALANCE SHEET DETAIL

8. ASSETS: CASH IN BANKS INCLUDES: • EACH BANK ACCOUNT BALANCE MONEYPOSTED AS DEPOSITED IN ENTECH

9. BALANCE SHEET DETAIL

10. TOTAL ASSETS: CASH AND BANK MONEY NOT DEPOSITED + CASH IN BANK TOTAL ASSETS MAINTAINING THE ASSETS THROUGH THE BANK RECONCILIATION IS KEY TO THE BALANCE SHEET

11. THE LIABILITIES IN ENTECH ARE DIVIDED INTO SEVERAL CATAGORIES DEPOSITS HELD, PREPAYMENTS HELD, AMOUNTS NOT POSTED, DUE OWNERS & ACCOUNTS PAYABLE LIABILITIES LIABILITIES

12. LIABILITIES: DEPOSITS HELD • MONEY THAT IS BEING HELD AS REFUNDABLE DEPOSITS

13. LIABILITIES: PREPAYMENTS HELD • MONEY RECEIVED FROM GUESTS BEFORE CHECK-IN TO PAY FOR RENT, TAX, AND/OR OTHER CHARGES.

14. LIABILITIES: AMOUNTS NOT POSTED • GUEST PAYMENTS THAT HAVE NOT DISPERSED TO THE OWNERS AND/OR VENDORS. • RESERVATIONS MUST BE CHECKED-IN OR CANCELLED FOR PREPAID MONEY TO BE LISTED IN AMOUNTS NOT POSTED.

15. LIABILITIES: DUE OWNERS • MONEY ON THE OWNER’S ACCOUNT TO BE PAID TO THE OWNER. • WHEN INCOME IS POSTED TO THE OWNERS (AS IN THE CASE OF RENTAL INCOME) IT IS DUE OWNERS UNTIL THE OWNER CHECKS ARE POSTED.

16. LIABILITIES: ACCOUNTS PAYABLE • MONEY ALLOCATED TO PAY TO VENDORS. • WHEN THE MONEY IS POSTED TO VENDORS (AS IN THE CASE OF TAXES) IT IS ACCOUNTS PAYABLE UNTIL THE VENDOR CHECKS ARE POSTED.

17. LIABILITIES: TOTAL LIABILITIES • DEPOSITS HELD • + • PREPAYMENTS HELD • + • AMOUNTS NOT POSTED • + • DUE OWNERS • + • ACCOUNTS PAYABLES • TOTAL LIABILITIES

18. ASSETS & LIABILITES MONEY NOT DEPOSITED + CASH IN BANK = DEPOSITS HELD + PREPAYMENTS HELD + AMOUNTS NOT POSTED + DUE OWNERS + ACCOUNTS PAYABLE = TOTAL LIABILITIES TOTAL ASSETS

19. BALANCE SHEET IN ACTION A GUEST SENDS IN A CHECK FOR A $300 SECURITY DEPOSIT. WHEN THE PAYMENT IS RECORDED MONEY NOT DEPOSITED WILL INCREASE $300 DEPOSITS HELD WILL INCREASE $300

20. BALANCE SHEET CASH FLOW ASSETS LIABILITIES $300 MONEY NOT DEPOSITED $300 DEPOSITS HELD

21. BALANCE SHEET SUMMARY

22. BALANCE SHEET IN ACTION ONCE THE $300 IS DEPOSITED IN THE BANK, IT MOVES FROM MONEY NOT DEPOSITED TO CASH IN BANK CASH IN BANK = $300 DEPOSITS HELD = $300

23. BALANCE SHEET CASH FLOW ASSETS LIABILITIES $300 CASH IN BANK $300 DEPOSITS HELD

24. BALANCE SHEET SUMMARY

25. BALANCE SHEET IN ACTION NOTICE THAT AS THE MONEY WAS COLLECTED BOTH SIDES OF THE BALANCE SHEET WERE AFFECTED ONCE THE MONEY WAS DEPOSITED INTO THE BANK THE ASSET DETAIL CHANGED BUT THE TOTAL ASSETS DID NOT CHANGE

26. BALANCE SHEET CASH FLOW IN BALANCE ASSETS ASSETS LIABILITIES LIABILITIES $300 MONEY NOT DEPOSITED $300 DEPOSITS HELD $300 CASH IN BANK $300 DEPOSITS HELD

27. BALANCE SHEET SUMMARY MONEY NOT DEPOSITED CASH IN BANKS

28. BALANCE SHEET IN ACTION A PREPAYMENT IS RECEIVED BY CREDIT CARD FOR $800 WHEN THE PAYMENT IS RECORDED MONEY NOT DEPOSITED WILL INCREASE $800 PREPAYMENTS HELD WILL INCREASE $800

29. BALANCE SHEET CASH FLOW ASSETS LIABILITIES $800 MONEY NOT DEPOSITED $800 PREPAYMENTS HELD

30. BALANCE SHEET SUMMARY

31. BALANCE SHEET IN ACTION ONCE THE $800 IS DEPOSITED IN THE BANK IT MOVES FROM MONEY NOT DEPOSITED TO CASH IN BANK CASH IN BANK = $800 PREPAYMENTS HELD = $800

32. BALANCE SHEET CASH FLOW ASSETS LIABILITIES $800 CASH IN BANK $800 PREPAYMENTS HELD

33. BALANCE SHEET SUMMARY

34. BALANCE SHEET IN ACTION ONCE THE RESERVATION CHECKS IN THE $800 IS NO LONGER A PREPAYMENT HELD IT IS NOW LISTED UNDER AMOUNTS NOT POSTED CASH IN BANK = $800 AMOUNTS NOT POSTED = $800

35. BALANCE SHEET CASH FLOW ASSETS LIABILITIES $800 CASH IN BANK $800 AMOUNTS NOT POSTED

36. BALANCE SHEET SUMMARY

37. BALANCE SHEET IN ACTION WHEN INCOME IS POSTED LIABILITIES ARE SHIFTED FROM AMOUNTS NOT POSTED TO DUE OWNERS AND ACCOUNTS PAYABLE THE ASSETS DO NOT CHANGE DUE OWNERS = RENTAL INCOME ACCOUNTS PAYABLE = TAXES, COMMISSION, OTHER RESERVATION CHARGES

38. BALANCE SHEET CASH FLOW ASSETS LIABILITIES $800 DUE OWNERS + ACCOUNTS PAYABLE $800 CASH IN BANK

39. BALANCE SHEET SUMMARY

40. BALANCE SHEET IN ACTION THE ASSETS AND THE LIABILITIES WILL BE REDUCED WHEN CHECKS ARE POSTED IF THE CHECK AMOUNT TO THE OWNER IS $595.00, THE CASH IN BANK AND DUE OWNERS WILL BE REDUCED BY $595.00

41. BALANCE SHEET CASH FLOW ASSETS LIABILITIES 205.00 CASH IN BANK 205.00 LIABILITIES CASH IN BANK $800.00 MINUS OWNER CHECK $595.00 = CASH IN BANK $205.00 LIABILITIES $800.00 MINUS OWNER CHECK $595.00 = LIABILITIES $205.00

42. BALANCE SHEET SUMMARY

43. BALANCE SHEET SUMMARY ANY QUESTIONS?

44. MAINTAINING THE BALANCE SHEET WHY IS THIS IMPORTANT? • YOUR MANAGEMENT COMPANY IS RESPONSIBLE FOR KNOWING WHERE ALL OF THE MONEY IS, UNTIL IT HAS BEEN DISPERSED TO THE GRANTEE. • YOU WILL BE ABLE TO SEE WHERE ALL THE FUNDS ARE FOR AUDITING PURPOSES. • PEACE OF MIND.

45. MAINTAINING THE BALANCE SHEET HOW OFTEN SHOULD THE BALANCE SHEET SUMMARY BE CHECKED/ PRINTED? • YOU SHOULD CHECK THE BALANCE SHEET SUMMARY AT LEAST ONCE A DAY. • WHENEVER YOU ARE DOING SOMETHING IN ENTECH AND YOU ARE NOT SURE ABOUT THE OUTCOME. • ANYTIME YOU GET A MESSAGE IN ENTECH ABOUT AFFECTING YOUR BALANCE SHEET SUMMARY. • EVERY MONTH ON THE CLOSING DATE OF THE BANK STATEMENT (SHOULD HAVE PRINTED COPY).

46. SUMMARY • BALANCE SHEET SUMMARY SHOULD REMAIN IN BALANCE AT ALL TIMES. • THE BANK ACCOUNT(S) SHOULD BE RECONCILED THROUGH ENTECH. • CHECK YOUR BALANCE SHEET AT LEAST ONCE A DAY. • WHEN YOU ARE OUT OF BALANCE, STOP AND EVALUATE. DO NOT LET DIFFERENCES LINGER.

47. ANY FINAL QUESTIONS?