I have a question regarding trust accounts for long term care
facilities, which are basically a holding account for residents'
spending money. This should simply be a cash account for holding
residents' deposits, and a liability account for each resident which
tracks the balance of each resident's deposits. When the resident
needs spending money, a withdrawal is made from the trust account, cash
decreases and the liability to the resident decreases. If the account
is interest bearing, the monthly interest is pro rated among the
depositors, and each earns interest based on the percentage of the
account that the resident owns.
We have an existing accounting software package that is basic AR, AP,
GL, etc. We are trying to determine how to incorporate this into the
software, whether it can somehow be accomplished in the existing
software or whether to write a new module. Would anyone have an
opinion on that?
Would such an account be part of the facility's balance sheet? Since
there is neither ownership by nor benefit to the home, is the cash
account considered an asset? Since this account contains money that is
property of the facility residents and not the facility itself, is it
required to report it on financial statements?
To me, it seems pretty simple, but I'm afraid that I might be missing
something in the big picture. I sure don't want to hose it up for the
Any comment on this situation will be deeply appreciated!