Expenses

John Rice on

   We are a new club with no checking account. I have paid
   for all of the expenses up front. Everybody in the club
   has deposited their first payment.
   I entered the expenses and the payment as per the help
   topic "Out of Pocket Expenses". The program lowered the
   unit value and changed my total units but did not change
   my market value or percentage. If you multiply the unit
   value by my percent, my value in the club does not
   change. It shows that I have contributed more money but
   my percentage doesn't change.
   It looks like I get screwed since it my percentage of the
   club is still the same, therefore I am the only one
   paying the expenses.
  Please help me understand this.

John
ABODI Investment Club

Cherilyn J. Peay on

John,
Other people may have a better idea. Here's what I did when I "loaned" the club money.
I used the Petty Cash account. My contribution went into petty cash and when the club reimbursed me it came out of petty cash without affecting values or units.

Someone else may have a better idea but it worked for us.

Cherilyn
New Mexico
At 10:16 AM 5/15/2008, you wrote:

   We are a new club with no checking account. I have paid
   for all of the expenses up front. Everybody in the club
   has deposited their first payment.
   I entered the expenses and the payment as per the help
   topic "Out of Pocket Expenses". The program lowered the
   unit value and changed my total units but did not change
   my market value or percentage. If you multiply the unit
   value by my percent, my value in the club does not
   change. It shows that I have contributed more money but
   my percentage doesn't change.
   It looks like I get screwed since it my percentage of the
   club is still the same, therefore I am the only one
   paying the expenses.
Please help me understand this.

John
ABODI Investment Club

Cherilyn J. Peay
PO Box 1408
Bernalillo, NM 87004-1408
(505) 867-4379
(505) 867-4224 fax

Gene Rooks on

John, if you entered all the contributions as payments to buy units, including the extra amount you contributed to provide cash for the expenses, and then entered the expenses by membership share, which is the correct way to do it, the number of units and percentage in the club should not change for anyone. The unit value will be lower, because the value of the club is now lower because of the expense.

If this is not what has happened, write back.

Gene Rooks, SWIM, Orlando

David Swierenga on

John,
There is a really important check box on the screen where
expenses are entered -- it is called "Allocate equally among
members." There is a link next to it that explains what
this means. If an expense is allocated equally among
members, each member's percentage will not change. Most
clubs allocate expenses by the percentage owned in the club.
My guess is that if you edit your expense transactions and
uncheck this box, that you will get credit for the expenses
you paid by having more units in your club.

Dave Swierenga

John Rice wrote:
> We are a new club with no checking account. I have paid
> for all of the expenses up front. Everybody in the club
> has deposited their first payment.
> I entered the expenses and the payment as per the help
> topic "Out of Pocket Expenses". The program lowered the
> unit value and changed my total units but did not change
> my market value or percentage. If you multiply the unit
> value by my percent, my value in the club does not
> change. It shows that I have contributed more money but
> my percentage doesn't change.
> It looks like I get screwed since it my percentage of the
> club is still the same, therefore I am the only one
> paying the expenses.
> Please help me understand this.
>
> John
> ABODI Investment Club

Rip West on

Dave Swierenga writes:

If an expense is allocated equally among members, each member's percentage will not change.>>

That is not accurate. In fact, the opposite is true. Assume a two man partnership where Able owns 90 units and Baker owns 10 units, each unit being worth $10. If you have a $100 expense that you are going to allocate equally, Able's units will be reduced by 5, as will Baker's. So you now have 90 total units and a club worth $900. Able used to own 90% [90/100]. Now he owns 94.45% [85/90]. So, when you allocate equally, each member's ownership percentage does change, as opposed to when you allocate in proportion to ownership.

As to John's original question, I need more information to analyze it. I assume he paid the expenses personally, and entered a payment for himself for that amount. How many units did he receive? How was the expense allocated?

Rip West
Saint Paul, MN

John Rice on

Thank you Rip for your explanation. I have been working on
getting this club up and running since January and had
personally paid for the expenses myself. The rest of the
club members didn't make their first payment until May. I
discovered that the reason I was confused was because of the
dates of the expenses and valuation. So, I waited until
everyone's payment was in and then entered the expenses and
my "payment" on the day after with the same valuation date.
It looks like it is correct.

John Rice
Anaheim, Ca

Rip West wrote:
> Dave Swierenga writes:
>  
> <<
> If an expense is allocated equally among members, each
> member's percentage will not change.>>
> >>
>  
> That is not accurate. In fact, the opposite is true.
> Assume a two man partnership where Able owns 90 units and Baker owns 10 units,
> each unit being worth $10. If you have a $100 expense that you are going to
> allocate equally, Able's units will be reduced by 5, as will Baker's. So you now
> have 90 total units and a club worth $900. Able used to own 90% [90/100]. Now he
> owns 94.45% [85/90]. So, when you allocate equally, each member's ownership
> percentage does change, as opposed to when you allocate in proportion to
> ownership.
>  
> As to John's original question, I need more information to
> analyze it. I assume he paid the expenses personally, and entered a payment for
> himself for that amount. How many units did he receive? How was the expense
> allocated?
>
> Rip West
> Saint Paul,
> MN

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