4370.2 REV-1

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CHAPTER 4. HUD CHART OF ACCOUNTS

4-1. INTRODUCTION

This chapter lists and defines the prescribed uniform system of

accounts used by owners of all HUD-insured, HUD-held,

cooperative and Section 202 direct loan projects. To assure that

project accounting transactions are properly recorded and

classified, project bookkeepers must familiarize themselves with

the account definitions contained in this chapter. Cooperative

projects must use the same accounts as other rental projects, as

well as the special asset and member equity accounts defined

specifically for Cooperative projects.

4-2. ORGANIZATION OF THE CHART OF ACCOUNTS

The HUD Chart of Accounts uses account categories prescribed

by generally accepted accounting principles.

A. The HUD Chart of Accounts is organized to provide

complete and comprehensive project records. Since the

project\'s annual financial statements are prepared on an

accrual basis, HUD encourages owners/managing agents

to keep project books and records on an accrual basis.

Owners/managing agents are responsible for making any

necessary year-end adjusting entries before the annual

project audit using the accounts prescribed in the HUD

Chart of Accounts.

B. Additional accounts not included in the HUD Chart of

Accounts should be established as needed, following

generally accepted accounting principles and classified

under the appropriate groupings in the HUD Chart of

Accounts.

C. An explanation of the Chart of Accounts appears in the

Manual of Accounts.

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4-1 5/92

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4370.2 REV-1

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4-3. CHART OF ACCOUNTS

A. 1000 ASSET ACCOUNTS.

1100 CURRENT ASSETS:

1110 Petty Cash

1120 Cash in Bank

1130 Tenant/Member Accounts Receivable

(Coops)

1140 Accounts Receivable (Other)

1150 Notes Receivable

1160 Accrued Receivables

1170 Investments (Short Term)

1190 Miscellaneous Current Assets

1191 Tenant Security Deposits - Held in Trust

1200 PREPAID EXPENSES:

1210 Fuel Inventory

1220 Gasoline and Oil Inventory

1230 Supplies Inventory

1240 Prepaid Property & Liability

Insurance

1250 Prepaid Mortgage Insurance

1260 Prepaid Advertising

1270 Prepaid Taxes

1290 MISCELLANEOUS PREPAID EXPENSES

1300 FUNDED RESERVES:

1310 Mortgagee Escrow Deposits

1320 Cash, Replacement Reserve

1321 Securities, Replacement Reserve

1330 Cash, Painting Reserve

1331 Securities, Painting Reserve

1340 Cash, Residual Receipts Reserve

1341 Securities, Residual Receipts Reserve

1350 Cash, General Reserves

1360 Securities, General Reserves

1365 General Operating Reserve (Coops)

1370 Apartment Rehabilitation Deposits,

(Coops)

1380 Project Improvement Account

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5/92 4-2

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4370.2 REV-1

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1400 FIXED ASSETS:

1410 Land

1420 Buildings

1430 Building Equipment (Fixed)

1440 Building Equipment (Portable)

1450 Furniture for Project/Tenant Use

1460 Furnishings

1470 Maintenance Equipment

1480 Motor Vehicles

1490 Miscellaneous Fixed Assets

1500 INVESTMENTS

1600 DEPOSITS RECEIVABLE

1700 SUSPENSE ACCOUNTS

1800 ORGANIZATION EXPENSES

1900 OTHER ASSETS

B. 2000 LIABILITY ACCOUNTS

2100 CURRENT LIABILITIES:

2110 Accounts Payable

2112 Accounts Payable - Project Improvement

Items

2115 Accounts Payable - HUD

2120 Accrued Wages and Payroll Taxes Payable

2130 Accrued Interest Payable

2140 Dividends or Distributions Payable

2150 Accrued Property Taxes

2160 Notes Payable (Short Term)

2190 Miscellaneous Current Liabilities

2191 Tenant Security Deposits Held in Trust

(Contra)

2200 PREPAID REVENUES:

2210 Prepaid Rent

2220 Prepaid Rent Revenue

2230 Apartment Rehabilitation Deposits

(Coops)

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4-3 5/92

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4370.2 REV-1

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2290 Miscellaneous Prepaid Revenues

2300 LONG TERM LIABILITIES:

2310 Notes Payable (Long-Term)

2311 Notes Payable - Surplus Cash

2320 Mortgage Payable

2330 Bonds Payable

2340 Flexible Subsidy Loan Payable

2350 Capital Improvement Loan Payable

2360 Operating Loss Loan Payable

2390 Miscellaneous Long Term Liabilities

C. 3000 MEMBERS EQUITY (NET WORTH)

3100 OWNER EQUITY

3105 Certificates Subscribed (Coops)

3110 Capital Stock - Preferred

3120 Capital Stock - Common

3130 Owner Equity or Certificates Held in

Treasury (Coops)

3140 Certificates of Initial Capital Value Issued

and Outstanding (Coops)

3200 EARNINGS

3210 Retained Earnings or Surplus or

Deficiency from Operations (Coops)

3215 Amortized Mortgage (Coops)

3220 Replacement Reserve (Coops)

3230 Painting Reserve

3235 General Operating Reserve (Coops)

3241 Paid-in Surplus (Coops)

3250 Profit or Loss (Net Income or Loss)

D. 4000 VALUATION ACCOUNTS

4100 ACCUMULATED DEPRECIATION

4120 Reserve for Depreciation - Building

4130 Reserve for Depreciation - Building

Equipment - Fixed

4140 Reserve for Depreciation - Building

Equipment - Portable

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5/92 4-4

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4370.2 REV-1

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4150 Reserve for Depreciation - Furniture for

Project and Tenant Use

4160 Reserve for Depreciation - Furnishings

4170 Reserve for Depreciation - Maintenance

Equipment

4180 Reserve for Depreciation - Motor

Vehicles

4190 Reserve for Depreciation - Miscellaneous

Fixed Assets

4200 OTHER RESERVES:

4210 Reserve for Collection Losses

E. 5000 REVENUE ACCOUNTS.

5100 RENT REVENUE - GROSS POTENTIAL:

5120 Rent Revenue - Apartments or Member

Carrying Charges (Coops)

5121 Tenant Assistance Payments

5130 Rent Revenue - Furniture and Equipment

5140 Rent Revenue - Stores and Commercial

5170 Garage and Parking Spaces

5180 Flexible Subsidy Revenue

5190 Rent Revenue Miscellaneous

5200 VACANCIES: (See 6370 Also)

5220 Apartments

5230 Furniture and Equipment

5240 Stores and Commercial

5270 Garage and Parking Space

5290 Miscellaneous

5300 ELDERLY AND CONGREGATE SERVICES

REVENUE

5400 FINANCIAL REVENUE:

5410 Interest Revenue - Project Operations

5420 Interest Reduction Payments (Section 236

only)

5430 Revenue from Investments - Residual

Receipts

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4-5 5/92

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4370.2 REV-1

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5440 Revenue from Investments - Replacement

Reserve

5490 Revenue from Investments

\- Miscellaneous

5900 OTHER REVENUE:

5910 Laundry and Vending Revenue

5920 NSF and Late Charges

5930 Damages and Cleaning Fees

5940 Forfeited Tenant Security Deposits

5990 Other Revenue (specify)

F. 6000 PROJECT EXPENSE ACCOUNTS

6200/6300 ADMINISTRATIVE EXPENSES.

6210 Advertising

6235 Apartment Resale Expense (Coops)

6250 Other Renting Expenses

6310 Office Salaries

6311 Office Supplies

6312 Office or Model Apartment Rent

6320 Management Fee

6330 Manager or Superintendent Salaries

6331 Manager or Superintendent Rent Free

Unit

6340 Legal Expense - Project

6350 Audit Expense

6351 Bookkeeping Fees/Accounting Services

6360 Telephone and Answering Service

6370 Bad Debts

6390 Miscellaneous Administrative Expenses

(specify)

6400 UTILITIES EXPENSES:

6420 Fuel Oil/Coal

6450 Electricity

6451 Water

6452 Gas

6453 Sewer

6500 OPERATING & MAINTENANCE EXPENSE:

6510 Janitor and Cleaning Payroll

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5/92 4-6

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4370.2 REV-1

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6515 Janitor and Cleaning Supplies

6517 Janitor and Cleaning Contract

6519 Exterminating Payroll/Contract

6520 Exterminating Supplies

6525 Garbage and Trash Removal

6530 Security Payroll/Contract

6535 Grounds Payroll

6536 Grounds Supplies

6537 Grounds Contract

6540 Repairs Payroll

6541 Repairs Material

6542 Repairs Contract

6545 Elevator Maintenance/Contract

6546 Heating/Cooling Repairs and

Maintenance

6547 Swim Pool Maintenance/Contract

6548 Snow Removal

6560 Decorating Payroll/Contract

6561 Decorating Supplies

6570 Vehicle and Maintenance Equipment

Operation and Repairs

6590 Miscellaneous Operating and Maintenance

Expenses

6600 DEPRECIATION EXPENSES

6620 Depreciation - Buildings

6630 Depreciation - Fixed Building Equipment

6640 Depreciation - Building Equipment

\- Portable

6650 Depreciation - Furniture for Project and

Tenant Use

6660 Depreciation - Furnishings

6670 Depreciation - Maintenance Equipment

6680 Depreciation - Motor Vehicle

6690 Depreciation - Miscellaneous

6700 TAXES & INSURANCE

6710 Real Estate Taxes

6711 Payroll Taxes (Project\'s Share)

6719 Miscellaneous Taxes, Licenses, and

Permits

6720 Property & Liability Insurance (Hazard)

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4-7 5/92

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4370.2 REV-1

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6721 Fidelity Bond Insurance

6722 Workmen\'s Compensation

6723 Health Insurance and Other Employee

Benefits

6729 Other Insurance

6800 FINANCIAL EXPENSES:

6810 Interest on Bonds Payable

6820 Interest on Mortgage Payable

6830 Interest on Notes Payable (Long Term)

6840 Interest on Notes Payable (Short Term)

6850 Mortgage Insurance Premium/Serv Chg

6890 Miscellaneous Financial Expenses

6900 ELDERLY AND CONGREGATE SERVICES

EXPENSES:

6930 Dietary Salaries

6932 Food

6933 Dietary Supplies

6940 Registered Nurses Payroll

6941 Licensed Practical Nurses Payroll

6942 Other Nursing Salaries

6950 Housekeeping Salaries

6951 Housekeeping Supplies

6952 Other Housekeeping

6960 Drugs and Pharmaceuticals

6961 Medical Salaries

6962 Other Medical

6970 Laundry and Linen

6980 Recreation and Rehabilitation

6990 Other Service Expenses

G. 7000 CORPORATE, MORTGAGOR, OR

COOPERATIVE EXPENSES:

7110 Officer\'s Salaries

7120 Legal Expenses

7130 Federal Income Tax

7131 State Income Tax

7132 Other Taxes (Entity)

7190 Other Expense

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5/92 4-8

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4370.2 REV-1

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4-4. MANUAL OF ACCOUNTS

1000 ASSET ACCOUNTS:

1100 CURRENT ASSETS:

1110 Petty Cash. This account represents the

established size of the imprest fund used to

make small cash payments for items such as

postage and small amounts of supplies. The

account is debited with the amount of the

disbursement establishing or increasing the size

of the fund. As cash is used, agents place

receipts for the amount withdrawn in the cash

drawer. Disbursements made to replenish the

petty cash fund are debited directly to the

appropriate project expense accounts at the

time the reimbursement check is recorded in

the Cash Disbursements Journal. At all times,

total petty cash on hand plus the receipts for

the bills paid must equal the amount of the

established fund.

1120 Cash in Bank. This account reflects the balance

of cash in the project\'s bank account(s). Debits

to the account are posted at least monthly from

the Cash Receipts Journal and credits are

posted at least monthly from the Cash

Disbursements Journal.

1130 Tenant/Member Accounts Receivable (Coops).

This account reflects the total rents receivable

from tenants. The account balance is

supported by the Tenant Accounts Receivable

subsidiary ledger. The account is debited by

journal entry at the end of each month for the

total rent roll from the following month. The

off-setting credit is made to the rental revenue

accounts in the 5000 series. Agents must make

an additional credit for Section 236 projects to

Account 2115, Accounts Payable - HUD for any

rents due from tenants in excess of the basic

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4370.2 REV-1

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monthly rent. Credits to the Tenant Accounts

Receivable accounts come from the Cash

Receipts Journal or from journal entries which

record concessions to tenants in lieu of rent

(see Account 6250).

1140 Accounts Receivable - Other. This account

represents amounts due the project other than

tenant rents receivable and accrued revenue. It

is a controlling account supported by a

subsidiary ledger. When there are other

accounts receivable, agents should record each

type separately in accounts numbered 1141 to

1149\. For example, Accounts Receivable - Rent

Supplement may be numbered Account

1143; Accounts Receivable, Section 8 Assistance

Payment, Account 1144; Fire Loss Draft

Receivable, Account 1145, etc.

1150 Notes Receivable. This account records an

notes receivable as they are acquired through

debits to the General Journal. Credits to the

account come from the Cash Receipts Journal

when payment is received. When there are

several types of notes receivable, agent should

record each type separately in accounts

numbered from 1151 to 1159.

1160 Accrued Receivables. This account reflects any

accrued revenue, other than from rent. The

account is established by year end journal entry

debiting the account for income earned but not

received. The offsetting credit is to the

appropriate revenue account. After the books

are closed, the adjusting entry is reversed.

Agents may subdivide the account into accounts

1161, 1162, etc., as necessary.

1170 Investments (Short Term). This account

records the amount of project funds invested in

short term investments other than those in the

Funded Reserves (1300) accounts. When the

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5/92 4-10

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4370.2 REV-1

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project has more than one type of short-term

investment, agents should record each type

separately in accounts numbered 1171 to 1179.

The account is credited when the project

disposes of any of the investments.

1190 Miscellaneous Current Assets. This account

records current assets not otherwise described

above. If necessary, agents may subdivide this

account into specific current asset accounts

numbered from 1192 to 1199.

1191 Tenant Securely Deposits - Held in Trust. This

account records tenant security deposits held by

the project, in the name of the project and in a

separate bank account. Agents may use

deposits to pay for tenant damages and

delinquent rents when a tenant vacates. Total

funds in the account must at all times equal or

exceed the corresponding liability account, 2191

Tenant Security Deposits - Held in Trust.

1200 PREPAID EXPENSES:

1210 through 1230, Inventory Accounts. Agents

record inventory accounts only when the

amount on hand at year-end is significant when

compared to the total expense for the fiscal

year. For example, if stored heating fuel at the

end of the fiscal year represents 20% of the

total fuel expense for the year, agents should

debit by a journal entry the value of the fuel on

hand to Fuel Inventory (Account 1210) with an

offsetting credit to Fuel Expense (Account

6420). Agents reverse the adjusting entry at the

beginning of the next accounting period.

1240 Prepaid Property and Liability Insurance. This

account records the unexpired portion of

prepaid insurance policies. The account is

debited from the Cash Disbursement Journal

when an insurance policy is purchased or when

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4-11 5/92

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4370.2 REV-1

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monthly payments are made on the policy with

the mortgage payment. At the close of the

accounting period, agents make an adjusting

journal entry crediting the cost of the expired

insurance and debiting Account 6720, Property

and Liability Insurance expense.

1250 Prepaid Mortgage Insurance. This account

reflects the balance of the mortgage insurance

premium (MIP) paid to HUD that is applicable

to the following fiscal period. At the close of

the accounting period, the account is debited

for any prepaid mortgage insurance with an

offsetting credit to Account 6850, Mortgage

Insurance Premium. The entry is reversed at

the beginning of the next accounting period.

1260 Prepaid Advertising. This account reflects the

cost of any unused advertising. Similar to the

inventory accounts, the unused cost is recorded

only when the amount at year-end is significant.

The account is established by an adjusting

journal entry debiting any unused advertising

and crediting Account 6210, Advertising

Expense. The entry is reversed at the

beginning of the following accounting period.

1270 Prepaid Taxes. This account reflects tax

payments that apply to future fiscal periods.

The account is established by an adjusting

journal entry debiting the taxes paid for future

periods and crediting Account 6710, Real

Estate Taxes. The entry is reversed at the

beginning of the following accounting period.

1290 Miscellaneous Prepaid Expenses. This account

records expenses, other than insurance and

taxes, that are paid in advance. The cost of the

asset is distributed through journal entry over

the usage period.

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5/92 4-12

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4370.2 REV-1

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1300 FUNDED RESERVES:

1310 Mortgagee Escrow Deposits. When used, this

clearing account transfers monthly payments of

taxes, insurance and replacement reserve

escrows to the appropriate expense, prepaid

expense or funded reserve account.

1320 Cash Replacement Reserve. This records the

monthly payments to the mortgagee, or, for

Section 202 Projects, funds deposited in special

bank accounts, as required by the Regulatory

Agreement.

1321 Securities - Replacement Reserve. This

account records replacement reserve funds that

are invested. Section 202 projects deposit

replacement reserve funds in a special bank

account(s). Credits to the account come from

the Cash Receipts Journal supported by

HUD-approved releases from the Replacement

Reserve account. Interest earned on the

account is credited to Account 5440, Income

from Investments - Replacement Reserve.

1330 Cash - Painting Reserve. This account records

all deposits made by the project to the painting

reserve. This account is used to pay costs

related to painting the project\'s exterior and

common space. Costs related to painting

individual tenant units are charged to Accounts

6560 and 6561, Decorating Payroll and Supplies.

1331 Securities - Painting Reserve. The balance of

the account reflects the total funds held or

invested in securities for the painting reserve

account.

1340 Cash - Residual Receipts Reserve. This

account records any required deposits to the

Residual Receipts Fund held by the mortgagee

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4-13 5/92

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4370.2 REV-1

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or, in the case of Section 202 projects, in a

separate Residual Receipts Account.

Mortgagors credit the account for

disbursements from the fund in amounts

authorized by HUD. Interest earned on the

account is credited to Account 5430, Revenue

from Investments - Residual Receipts.

1341 Securities - Residual Receipts Reserve. The

balance of this account reflects total funds held

or invested in securities by the mortgagee using

funds from the Residual Receipt Account or, in

the case of Section 202 projects, funds held in

separately identified investments.

1350 Cash - General Reserves. This account records

amounts paid in by the mortgagor for general

purposes. Credits to the account come from

disbursements for debt service or other

accounts paid from the fund.

1360 Securities - General Reserves. These accounts

record funds which are held or invested in

securities for general purpose as required by

the Certificate of Incorporation.

1365 General Operating Reserve (GOR). This

account records monthly deposits made to a

special escrow account under the control of the

cooperative mortgagor entity. The amount of

the required monthly deposit varies by both the

GOR account balance and the total amount of

monthly member carrying charges. See

Paragraph 3 of the cooperative regulatory

agreement to determine: (1) what percentage

of monthly carrying charges the cooperative

must deposit to the account; and (2) conditions

for withdrawal from the account. The account

provides for contingencies that a cooperative

would otherwise meet only through a special

assessment to its members. For example,

cooperatives may make disbursements from the

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5/92 4-14

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4370.2 REV-1

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account to repurchase stock of withdrawing

members or to meet short-term operating

deficits because of delinquent receivables from

cooperative members. The account is

reimbursed (debited) when the cooperative

resells the unit or when the cooperative collects

the delinquent member carrying charges. Also

see Account 3235, General Operating Reserve

(contra) and Account 3241, Paid-in Surplus for

recording amounts paid by members in excess

of the initial capital value of their membership.

1370 Apartment Rehabilitation Deposits. This

account records deposits received from tenants

who rent units owned by the cooperative. The

offsetting credit is to Account 2230.

1380 Project Improvement Account. Owners must

establish this account for all projects receiving

Flexible Subsidy assistance. HUD may also

require owners to establish this account as a

condition for approving a workout agreement or

transfer of physical assets. The restricted asset

account is debited when funds are deposited

and is credited when funds are transferred from

the account. Sources of funds include owner

contributions, releases from reserves, Flexible

Subsidy payments, retroactive mortgage relief,

etc. When Flexible Subsidy assistance is

deposited to the Project Improvement Account,

the offsetting credit is to Flexible Subsidy Loan

Payable (2340), or Capital Improvement Loan

Payable (2350), or an Owner\'s Equity Account

(3100).

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4-15 5/92

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4370.2 REV-1

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1400 FIXED ASSETS:

1410 Land. The purchase price of the land plus the

cost of improvements to the land are charged to

this account. Costs of excavating for basements

and expenses applicable to the buildings are not

included. The balance of the account

represents the total outlay necessary to obtain

the land and to make the improvements to it.

In some instances, it may be desirable to charge

depreciation on certain land improvements.

These are charged to a separate account

beginning with Account 1411. This also

requires setting up additional accounts in both

depreciation reserves and depreciation

expenses. Agents should assign these additional

accounts numbers 4110 and 6610, respectively.

1420 Buildings. The total cost of the buildings,

exclusive of building equipment, furniture, and

furnishings, is charged to this account. Agents

should also charge improvements to the

buildings to this account. Credits are made

when the building is disposed of. The balance

represents the original cost of the buildings plus

enhancements.

1430 Building Equipment - Fixed. The balance of

this account represents the installed cost of all

fixed building equipment in use. When

necessary, this account may be subdivided for

different groups of assets. For example,

Account 1432 may be titled \"Building

Equipment Fixed - Plumbing Fixtures\" and

include items such as kitchen sinks, garbage

disposals, and bath tubs. Account 1433 may be

titled \"Building Equipment Fixed - Utility

Systems\" and include project assets such as

heating or cooling units and hot water heaters.

When this account is subdivided, agents should

establish additional depreciation reserve and

expense accounts for each sub-group.

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5/92 4-16

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4370.2 REV-1

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1440 Building Equipment - Portable. The balance of

this account represents the total cost of the

portable equipment in use. Costs include any

transportation or installation charges. Assets in

this account include items such as stoves,

refrigerators and fire extinguishers. The

account is credited as equipment is withdrawn

from project use.

1450 Furniture - For Project and Tenant Use. The

net cost of all equipment and furniture

purchased by the project for use in the project

office, lobbies, halls, lawns, and sundecks, plus

the freight and drayage on the furniture, is

charged to this account. The cost of furniture

purchased from project funds for rental to

tenants is charged to Account 1451. The

account is credited as furniture is withdrawn for

project or tenant use.

1460 Furnishings. The cost of furnishings (window

shades, venetian blinds shower curtains, hall

carpets, etc.) not charged to the cost of the

building is recorded in this account. Credits to

the account are made when furnishings are

withdrawn from use. The balance of the

account represents the cost of the furnishings in

use.

1470 Maintenance Equipment. The balance of this

account represents the cost of project

maintenance equipment in use. The account

includes items such as janitor\'s tools, vacuum

cleaners, lawn mowers or snow blowing

equipment. The cost of equipment is credited

when the asset is withdrawn from use.

1480 Motor Vehicles. The cost of buses, trucks,

passenger cars, etc., is recorded in this account.

Each vehicle is shown separately and given an

account number in the 1480 group. Equipment

withdrawn from use is credited to this account.

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4-17 5/92

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4370.2 REV-1

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The balance represents the cost of each vehicle

in use.

1490 Miscellaneous Fixed Assets. Agents may record

fixed assets for which no other provision is

made in this account. If necessary, agents

should subdivide this account into specific fixed

asset accounts in the 1490 group.

1500 INVESTMENTS:

This account records long-term investments (those expected to

be held for more than one year) other than those included in

the Fund Reserves (1300) Series. The account is credited when

the project disposes of the investment.

1600 DEPOSITS RECEIVABLE:

This account reflects the amount of security and other deposits

which are due from tenants, but not received. The account is

credited when deposits are collected.

1700 SUSPENSE ACCOUNTS:

This account reflects charges for items that are temporarily left

unadjusted, such as bad checks from tenants. When the item

(check) is cleared, the account is credited.

1800 ORGANIZATION EXPENSES:

This account reflects the cost of organizing or forming the

mortgagor entity. These costs may include filing fees, attorney\'s

fees and other recording costs. The account is credited through

general journal entries amortizing the original organization

costs.

1900 OTHER ASSETS:

This account records non-current assets that are not otherwise

classified above. Agents should give a descriptive title to any

asset included in the 1900 Series.

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5/92 4-18

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4370.2 REV-1

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2000 LIABILITY ACCOUNTS:

2100 CURRENT LIABILITIES:

2110 Accounts Payable. This account reflects the

total of unpaid bills other than bills to be paid

from the Project Improvement Account. (See

Accounts 1380 and 2112). The account is a

controlling account supported by an Accounts

Payable subsidiary ledger or by the file of

unpaid vouchers. The account is credited by

journal entry for the total of the bills invoiced

for payment. Debits to the account come from

the Cash Disbursements Journal. After posting,

the total of the accounts payable ledger or

unpaid vouchers in the voucher file should

equal the balance of this controlling account.

2112 Accounts Payable - Project Improvement Items.

This account reflects the total of bills vouchered

for work items under the Flexible Subsidy

Program to be paid from funds transferred from

the Project Improvement Account (1380) to the

project bank account (1120). Credits to the

account come from work items included on

Lines 1a through d of Part II, Section C of the

Management Improvement and Operating

(MIO) Plan, Form HUD-9835B.

2115 Accounts Payable - HUD. Used only for

Section 236 projects, this account reflects any

amount due HUD for rents collected in excess

of the allowable basic rents. The account is

credited monthly from the Rent Roll and is

debited monthly from the Cash Disbursements

Journal when a check for the amount of excess

rents is sent to HUD. The amount due HUD

for the reporting month is shown on Line 6 of

the Form HUD-93104, Monthly Report of

Excess Income. When no payment is due HUD

for the reporting month (i.e., when Line 7 of

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4-19 5/92

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4370.2 REV-1

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the HUD-93104 is a positive amount), the

balance in the account is debited with an

offsetting credit to Account 5190, Rental

Income Miscellaneous.

2120 Accrued Wages and Payroll Taxes Payable.

This account records by Journal entry the gross

amount of payroll and payroll taxes that has

been accrued, but not paid, at the end of the

accounting period. If necessary, agents may

subdivide the account to accrue for the different

types of accrued taxes payable (e.g., Account

2121, Federal Withholding Taxes Payable;

Account 2122, FICA Taxes Payable; etc.). This

entry is reversed at the beginning of the next

following accounting period.

2130 Accrued Interest Payable. This account records

by adjusting journal entry, interest accrued but

unpaid on the mortgage and other interest-bearing

obligations at the end of the accounting

period. For Section 236 projects, agents should

include only the mortgagor\'s portion of the

interest liability on the mortgage. At the

beginning of the following accounting period the

entry is reversed.

2140 Dividends or Distributions Payable. This

account is used by profit-motivated and limited

dividend mortgagor entities. The account

records, through journal entry, dividends or

distributions declared by the owner but not yet

paid. The offsetting debit is to Account 3210,

Retained Earnings. The amount of the

dividend or distribution paid during the present

period should agree with total(s) from Line 4,

\"Amount Available for Distribution During the

Next Fiscal Period,\" of the Form HUD-93486,

Computation of Surplus Cash, Distributions and

Residual Receipts, prepared for the prior

period (or periods, where the distribution may

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5/92 4-20

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4370.2 REV-1

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be made semiannually). The account is debited

when the dividend or distribution is paid.

2150 Accrued Property Taxes. This account records

by journal entry the accrual of property taxes

incurred and payable in the subsequent year. If

necessary, the account may be subdivided to

include different types of property taxes accrued

(e.g., local real estate, county real estate,

personal property taxes, etc.). The entry is

reversed at the beginning of the next accounting

period.

2160 Notes Payable (Short-Term). This account

records liabilities on notes due within one year.

The account is credited when a cash loan is

secured by a short-term note. When a note is

secured to cancel another project payable, the

account is credited through journal entry. The

account is debited from the Cash

Disbursements Journal when payment is made

on the note.

2190 Miscellaneous Current Liabilities. This account

records current liabilities not otherwise

described above. If necessary, owners may

subdivide this account into specific current

liability accounts numbered from 2192 to 2199.

2191 Tenant Securely Deposits - Held in Trust

(Contra). This account records the offsetting

liability resulting from transactions recorded in

Account 1191.

2200 PREPAID INCOMES:

2210 Prepaid Rents. This account records rents

received from tenants (including commercial

tenants) that apply to future accounting periods.

When the rent is received in advance, this

account is credited and Cash (1120) is debited.

As the rent becomes due, agents make a

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4-21 5/92

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4370.2 REV-1

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journal entry debiting this account and crediting

Tenant Accounts Receivable (1130).

2220 Prepaid Interest Revenue. This account

records by journal entry all interest revenue

received but not earned at the close of the

accounting period. A corresponding debit is

made to the Interest Revenue (5400 Series)

account. The entry is reversed at the beginning

of the next accounting period.

2230 Apartment Rehabilitation Deposits. Cooperatives

establish this account contra to Account 1370. The

balance reflects the cooperative\'s obligation to refund

the deposit if rehabilitation of the rented unit is

unnecessary.

2290 Miscellaneous Prepaid Revenues. This account

records any prepaid revenue other than rents or

interest. Agent should establish specific

accounts in the 2290 Series to record any

miscellaneous prepaid incomes.

2300 LONG-TERM LIABILITIES:

2310 Notes Payable (Long-Term). This account

reflects amounts on notes due more than one

year from the date of the balance sheet. The

amount due within one year is recorded in

Account 2160. The account is credited when

long-term notes are issued and is debited as

principal payments are made on the notes.

Interest paid on the note is charged to Account

6830, Interest on Notes Payable (Long-Term).

2311 Notes Payable - Surplus Cash. This account

records project obligations (1) payable only

from available surplus cash, and (2) in

accordance with the terms of the note. The

account is credited when the note is issued and

debited when payments are made on the note

from available surplus cash.

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5/92 4-22

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4370.2 REV-1

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2320 Mortgage Payable. This account reflects the unpaid

principal balance of the mortgage. The account is

debited by the amount of regular amortization payments

made on the mortgage. Interest payments on the

mortgage are charged to Account 6820, interest on

Mortgage Payable.

2330 Bonds Payable. When the project is

permanently financed through bond issue, the

par value of the bonds is charged to this

account. The account is debited as payments

are made on the bonds or if the bonds are

canceled, Interest paid on the bonds is charged

to Account 6810, Interest on Bonds Payable.

2340 Flexible Subsidy Loan Payable. This account reflects

the total amount of the unpaid balance of flexible

subsidy Operating Assistance loans. Credits to the

account are made when the proceeds of a loan is

received and an agreement has been executed. The

balance in the account is decreased (debited) for the

amount of the principal paid each time a payment is

made.

2350 Capital Improvement Loan Payable. This account

balance represents the unpaid balance of a capital

improvement loan. Funds from this account are used to

repair or replace major systems in low and moderate

income multi-family buildings. The balance is reduced

by the amount of principal paid with each loan payment

made.

2360 Operating Loss Loan Payable. This account represents

the unpaid balance of a loan obtained to sustain

operations due to a prior year operating loss. The use

of the proceeds from this type of loan is restricted to

expenditures for operating expenses. The account

balance is decreased by the amount of the principal

paid with each loan payment.

2390 Miscellaneous Long-Term Liabilities. This

account records long-term liabilities not

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4-23 5/92

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4370.2 REV-1

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otherwise described above. If necessary, agents

should subdivide the account into specific

long-term liability accounts numbered from 2391

through

3000 EQUITY ACCOUNTS:

3100 OWNER EQUITY:

3105 Certificates Subscribed. This account reflects

the par or assigned value of subscribed

membership certificates or capital stock.

Charges (debits) are made to the account when

the cooperative issues membership certificates

or stock to new members. The offsetting credit

is to Account 3140, Certificate of Initial Capital

Value Issued and Outstanding.

3110 Capital Stock - Preferred. This account

normally is used by mortgagors controlled by

HUD through a Corporate Charter rather than

through a Regulatory Agreement.

3120 Capital Stock - Common. The class of capital

stock which has all the residual interests in the

corporation with no limitations nor preferences

in distribution of retained earnings or ultimate

distribution of assets. In Cooperatives with only

one class of shares, it is the same as the Capital

Stock (Account 3110).

3130 Owner Equity or Certificate Held in Treasury.

These control accounts reflect the total amount of

capital invested in the project by its owners. Subsidiary

accounts are normally maintained for each class of stock

or owner. The accounts are credited as additional

capital is contributed to the project by the owner(s).

Cooperatives debit this account when the outgoing

member\'s unit is resold.

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5/92 4-24

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4370.2 REV-1

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3140 Certificate of Initial Value Issued and

Outstanding. This account reflects the initial

value of all subscribed and outstanding

membership certificates or stock. The account

is credited when the cooperative issues

subscribed certificates or stock to new

members. The account is debited when

certificates are returned to the Treasury

(Account 3130) pending resale of the units.

3200 EARNINGS:

3210 Retained Earnings or Surplus or Deficiency

from Operations (Coops). This control account

reflects the accumulated earnings of a

mortgagor entity that are not distributed to

owners. The account is debited when dividends

or distributions are declared and for any net

loss from operation of the project. The account

is credited with any net income from operations

of the project.

In the case of cooperatives, this account records by

Journal entry the surplus (debit) or deficiency (credit)

from the cooperative\'s operation during the reporting

year. The appropriate offsetting debit or credit comes

from Account 3250, Profit or Loss. The balance of this

account represents the cooperative\'s surplus or

deficiency from operations since the initial occupancy of

the cooperative. This account also records by journal

entry any patronage refunds the cooperative makes to

members.

3215 - 3235 RESERVE ACCOUNTS:

These accounts record appropriations of retained

earnings for general or specific purposes. These

accounts record through journal entry the monthly

payments made to principal and the funded reserve

accounts. The offsetting debit is to Account 3241,

Paid-in Surplus.

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4-25 5/92

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4370.2 REV-1

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3215 Amortized Mortgage. For cooperatives, this account

records amounts paid for mortgage amortization.

Credit entries are made to this account with offsetting

debit entries to Paid-in Surplus Account 3241.

3220 Replacement Reserve. This account is used to accrue

funds for planned replacement of major capital items

such as heating units, roofs, etc. Credit entries are

made to this account with offsetting debit entries to the

Paid-in Surplus Account 3241.

3230 Painting Reserve. This account is used to accrue funds

for planned painting services. Credit entries are made

to this account with offsetting debit entries to the

Paid-in Surplus Account 3241.

3235 General Operating Reserve. This account is used to

maintain a fund for general operating expenses. Credit

entries are made to this account with offsetting debit

entries to the Paid-in Surplus Account 3241.

3241 Paid-in Surplus. This account records amounts paid by

member in excess of the initial value of their

membership certificate or stock. Entries to this account

separate paid-in surplus from member carrying charges

(Account 5120). The account is credited by the total

amount of monthly principal and reserve payments.

The offsetting debit is to Account 5120, Member

Carrying Charges, thereby reducing the cooperative\'s

operating income by the amount of member capital

contributions.

3250 Income or Loss. All project revenue (5000

Series) and expense (6000 and 7000 Series) are

transferred to this account when the project\'s

books are closed. After audit, this account is

closed to Retained Earnings (3210) or Owner\'s

Equity (3130).

4000 VALUATION ACCOUNTS:

4100 ACCUMULATED DEPRECIATION - (4120 - 4190):

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5/92 4-26

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4370.2 REV-1

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These accounts reflect the accumulated

depreciation on the fixed assets currently in use by

the project. The accounts are credited at the end

of the accounting period by the amount of

depreciation charged against operations (6600

Series) and based on the estimated useful life of

the asset being depreciated. When the asset is

withdrawn from project use, the account is debited

through journal entry.

4200 RESERVE FOR COLLECTION LOSSES:

This account records the amount of tenant

accounts receivable that agents estimate are

uncollectible. This Allowance is increased (and an

expense recorded) when full collection becomes

doubtful. A journal entry is made crediting this

account and debiting Bad Debt Expense (Account

6370\) for the estimated amount of uncollectible

Tenant Accounts Receivable. The Allowance is

decreased when the receivables are formally

written off. When all collection efforts have failed,

the amount of the debt is \"written off\' by journal

entry debiting this account and crediting Account

1130, Tenant Accounts Receivable.

5000 REVENUE ACCOUNTS:

Unless otherwise noted, the balance of all revenue

accounts are closed to Account 3250, Profit and

Loss at the end of the accounting period.

5100 RENT REVENUE - GROSS POTENTIAL:

5120 Rent Revenue - Apartments or Member

Carrying Charges (Coop). Except for Section

236 and 221(d)(3) BMIR projects, this account

records gross rent potential less tenant

assistance payments for all residential units

(including non-revenue producing units). For

section 236 and 221(d)(3) BMIR projects, the

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4-27 5/92

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4370.2 REV-1

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account records basic rental charges due for

tenants as shown on the latest Form HUD-92458,

Rental Schedule, less tenant assistance

payments. See Account 5190 for treatment of

rents due or collected from tenants paying

amounts greater than the basic rental charge.

Offsetting debits to this account are Account

1130, Tenant Accounts Receivable, Account

5220, Vacancies - Apartments, and Account

6331, Manager or Superintendent Rent Free

Unit.

5121 Tenant Assistance Payments. This account

records tenant assistance payments received or

earned by the project. Tenant assistance

payment programs include the Rent

Supplement, Rental Assistance Payment (RAP),

and Section 8 programs, including vacancy and

debt service special claims.

5130 Rent Revenue - Furniture and Equipment.

This account records the gross rent revenue

expectancy from furniture and equipment when

the project provides furnished apartments.

5140 Rent Revenue - Stores and Commercial. This

account records gross rental revenue expectancy

from stores, offices, rented basement space or

other commercial facilities.

5170 Garage and Parking Spaces. This account

records the gross potential rental revenue from

all garage and parking spaces.

5180 Flexible Subsidy Revenue. This account reflects

the amount of Project Improvement Funds

transferred from the Project Improvement

Account (1380) to reduce mortgage or escrow

deficiencies, to cover operating deficits or to

meet working capital needs. These amounts

are reported on form HUD-9823 A Requisition

for Advance of Flexible Subsidy Funds. The

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5/92 4-28

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4370.2 REV-1

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offsetting debit is to the relevant asset or

expense account. At the close of the

accounting period, agents must adjust the

account by journal entry for any project

expenses or releases awarded to pay accounts

payable from prior fiscal periods.

5190 Rent Revenue - Miscellaneous. This account

records gross rental revenue expectancy not

otherwise described above. For Section

221(d)(3) BMIR projects, this account records

rental collections due from over-income limit

tenants in excess of the basic rental charge.

For Section 236 projects, this account records

excess rents collected from tenants when no

payment is due HUD for the reporting month.

Also see definition of Account 2115, Accounts

Payable - HUD.

5200 Vacancies. These accounts (5220-5290) record rental

revenue lost through vacancy of an apartment unit or

otherwise revenue-producing space or equipment.

Agents normally debit the accounts monthly. At the

end of the accounting period, the balance of these

accounts are closed to Account 3250 Net Income or

Loss.

5300 Elderly and Congregate Services Revenue. These

accounts (5300-5390) are used primarily by projects

designed for the elderly. The accounts record revenues

received other than rents for services provided to

tenants (e.g., meal services, housekeeping and nursing

care services). Service-related expenses are charged to

the 6900 services accounts. A schedule shall be

attached to the Statement of Income summarizing these

accounts.

5400 FINANCIAL REVENUE:

5410 Interest Revenue - Project Operations. This account is

used to record interest earned on funds in project

operating accounts. This account will be credited for

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4-29 5/92

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4370.2 REV-1

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the interest amount and the appropriate interest

generating asset account will be debited.

5420 Interest Reduction Payments. This account is used to

record interest reduction payments made to the

mortgagee by HUD on behalf of the project owner

under Section 236 of the National Housing Act. This

revenue account will be credited for the amount of the

payment and the appropriate interest expense account

will be debited.

5430 Revenue from Investments - Residual Receipts. This

account records interest earned from residual receipts

investments. The account will be credited for the

interest amount and the appropriate interest generating

asset account will be debited.

5490 Revenue from Investments - Miscellaneous. This

account records interest earned from other

miscellaneous investments. The account will be credited

for the interest amount and the appropriate interest

generating asset account will be debited.

5900 OTHER REVENUE:

5910 Laundry and Vending Revenue. This account records

project revenues received from laundry and vending

machines owned or leased by the project.

5920 NSF and Late Charges. This account records charges

assessed to tenants for rent checks returned for

insufficient funds and for late payment of rents.

5930 Damages and Cleaning Fees. This account records

charges collected from tenants for damages to

apartment units and for fees paid by tenants for

cleaning of an apartment unit (other than regular

housekeeping services).

5940 Forfeited Tenant Security Deposits. This account

records any security deposits forfeited by tenants moving

out of the project. The account is credited only when

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5/92 4-30

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4370.2 REV-1

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the tenant security deposit is deposited to the project

operating account.

5990 Other Revenue. This account records project revenues

not otherwise described in the above revenue accounts.

If necessary, agents should subdivide the account into

specific revenue accounts numbered 5991 through 5999.

6000 PROJECT EXPENSE ACCOUNTS:

All project expense accounts are closed to Account 3250, Profit

and Loss, at the end of the accounting period. Unless otherwise

noted, all debits to the expense accounts are made from the

Cash Disbursements Journal.

6200 AND 6300 ADMINISTRATIVE EXPENSES:

6210 Advertising. This account records the cost of

advertising the rental property. The cost of any

unused advertising, if significant, is transferred

by journal entry to Account 1260, Prepaid

Advertising, at the end of the accounting

period.

6235 Apartment Resale Expense. This account

records repair costs required following the sale

of a cooperative unit less any portion of the

seller\'s equity that was applied against repair

costs.

6250 Other Renting Expenses. This account records

miscellaneous expenses related to the rent-up of

vacant units. For example, charges to this

account may include reasonable payments to

third parties for referring new tenants to the

project or the cost of new locks after a tenant

moves out. Agents may also charge this

account for any allowance given tenants in lieu

of rent (e.g., providing a new tenant a week\'s

free rent in exchange for cleaning and painting

the unit).

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4-31 5/92

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4370.2 REV-1

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6310 Office Salaries. This account records salaries paid to

office employees (other than the resident manager)

responsible for the front-line operation of the project

regardless of whether the employee works on site or in

the agent\'s office. Front-line responsibilities include

for example, taking applications, verifying income and

processing maintenance requests. The account does not

include salaries paid to occupancy, maintenance and

regional supervisors who carry out the agent\'s

responsibility for overseeing for supervising project

operations and personnel. These salaries are paid from

the management fee. This account also does not

include the project\'s share of payroll taxes (Account

6711\) or other employee benefits (Account 6723) paid

by the project.

6311 Office Supplies. This account records office

expense items such as supplies, postage,

stationery and copying.

6312 Office or Model Apartment Rent. This account

records the rental value of an apartment,

otherwise considered potentially rent-producing,

but used as the project office or as a model

apartment. The account is normally debited by

journal entry.

6320 Management Fee. This account records the

cost of management agent service contracted

for by the project. This account does not

include charges for bookkeeping or accounting

services paid directly by the project to either

the management agent or another third party

(see account 6351).

6330 Manager or Superintendent Salaries. This

account records salaries paid to a resident

manager or superintendent. It doe not include

the project\'s share of payroll taxes or other

employee benefits or compensation given a

resident manager or superintendent in lieu of

salary payments.

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5/92 4-32

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4370.2 REV-1

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6331 Manager\'s or Superintendent\'s Rent Free Unit.

This account records the contract rent of any

rent free unit provided a resident manager or

superintendent which would otherwise be

considered revenue producing.

6340 Legal Expense. This account records legal fees

or services incurred on behalf of the project (as

distinguished from the mortgagor entity). For

example, agents charge legal fees for eviction

procedures to this account.

6350 Audit Expense - Project. This account records

the auditing expenses incurred by the project

that are directly related to HUD requirements

for reviewed financial statements and reports.

This account also includes the auditor\'s charge

for preparing the mortgagor entity\'s Federal,

State and Local tax returns. This account does

not include the cost of routine maintenance or

review of the project\'s books and records (see

account 6351).

6351 Bookkeeping Fees/Accounting Services. This

account records the cost of bookkeeping fees or

accounting or computing services not included

in the management fee but paid to either the

agent or a third party.

6360 Telephone and Answering Service Expenses.

This account records the cost of telephone or

answering services provided on behalf of the

project.

6370 Bad Debts Expense. This account records by

journal entry the amount of tenant accounts

receivable the agent estimates uncollectible at

the end of the accounting period. The

offsetting credit is to Account 4220, Allowance

for Vacancy and Doubtful Tenant Accounts.

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4-33 5/92

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4370.2 REV-1

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6390 Miscellaneous Administrative Expenses. This

account records administrative expenses not

otherwise classified in the 6300 Series. If

necessary, agents should subdivide the account

into specific accounts numbered 6391 through

6399\.

6420-6453 UTILITIES EXPENSE:

These accounts record the costs of utility charges

billed the project. If the amount of fuel oil at year

end is significant compared to the total fuel oil

expense for the year, agents should credit the

account by journal entry for the value of the fuel

oil and debit Account 1210, Fuel Inventory.

6500 OPERATING AND MAINTENANCE EXPENSES:

6510 Janitor and Cleaning Payroll. This account

records the salaries of janitors employed by the

project. Agents should also include any

compensation given in lieu of salary (such as a

rent-free or reduced-rate rental unit) in

Account 6510. This account should not include

the project\'s share or payroll taxes (FICA and

Unemployment) or other employee benefits

paid to the project.

6515 Janitor and Cleaning Supplies. This account

records all costs of janitor supplies charged to

the project.

6517 Janitor and Cleaning Contract. This account

records the cost of janitor or cleaning contracts

the owner or agent executes with third parties

on behalf of the project.

6519 Exterminating Payroll Contract. This account

records the charges to a project for labor or

costs associated with an exterminating contract

executed with a third party by the owner or

agent.

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5/92 4-34

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4370.2 REV-1

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6520 Exterminating Supplies. This account records

the costs charged to the project for materials

used in exterminating.

6525 Garbage and Trash Removal. This account

records the cost of removing garbage and

rubbish from the project. The account does not

include salaries paid to janitors who collect the

trash.

6530 Securely Payroll/Contract. This account records

the project\'s payroll cost attributable to the

protection of the project or the costs of a

protection contract that the owner or agent

executes on behalf of the project.

6535 Grounds Payroll. This account records the

salaries of project employees whose primary

responsibility is caring for project grounds.

Project payroll costs related to permanent

improvement to project grounds is capitalized

and not charged to this account. This account

does not include the project\'s share of payroll

taxes or other employee benefits paid by the

project.

6536 Grounds Supplies. This account records the

cost of equipment and supplies used in

maintaining projects grounds. Charges to this

account include the costs of shovels, rakes,

seed, sod and shrubbery.

6537 Grounds Contract. This account records

charges to the project for grounds service

contracts executed by the owner or agent.

6540 Repairs Payroll. This account records the

salaries of project employees who repair project

owned equipment or other assets. This account

does not include the project\'s share of payroll

taxes or other employee benefits paid by the

project.

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4-35 5/92

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4370.2 REV-1

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6541 Repairs Material. This account records the

costs charged to the project for material used in

repairs.

6542 Repairs Contract. This account records the

cost of contract repairs to project assets.

Agents should capitalize repairs of significant

amounts which extend the useful life of the

asset.

6545 Elevator Maintenance/Contract. This account

records the cost of maintaining or repairing

elevators by project employees or charges to

the project for an elevator maintenance

contract executed by the owner or agent.

6546 Heating/Cooling Repairs and Maintenance.

This account records the cost of repairing and

maintaining heating or air conditioning

equipment owned by the project. Agents

should capitalize repairs of significant amounts

which extend the useful life of the equipment.

6547 Swim Pool Maintenance/Contract. This account

records the costs of maintaining and operating

the swimming pool by project employees or the

charges to the project for any swimming pool

contract executed by the owner or agent.

6548 Snow Removal. This account records the cost

of removing snow from project sidewalks and

parking areas.

6560 Decorating Payroll/Contract. This account

records the salaries of project employees whose

responsibility is decorating rental units, common

space or the building\'s exterior.

6561 Decorating Supplies. This account records the

cost of project labor and supplies in decorating

rental units, common space or the building\'s

exterior or charges to the project for any

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5/92 4-36

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4370.2 REV-1

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decorating contract executed by the owner or

agent.

6570 Vehicle and Maintenance Equipment Operation

and Repairs. This account records the cost of

operating and repairing project motor vehicles

and maintenance equipment. Motor vehicle

insurance is not included in this account but is

charged to Account 6720, Property and Liability

Insurance (Hazard).

6590 Miscellaneous Operating and Maintenance

Expenses. This account records the cost of

maintenance and repairs not otherwise

classified in the 6400 and 6500 account Series.

If necessary, agents should subdivide the

account into specific accounts numbered 6591

through 6599.

6600-6690 DEPRECIATION:

HUD does not prescribe the method of

depreciation for fixed assets of the project. The

method of depreciation, however, must conform to

GAAP.

These accounts represent depreciation charged for

the fixed asset accounts during the accounting

period. Agents make the corresponding credit to

accounts in the 4100 Series, Accumulated

Depreciation.

6700 TAXES AND INSURANCE:

6710 Real Estate Taxes. This account records

payments made for real estate taxes of the

project. At the end of project fiscal year, the

account is credited by journal entry for any

taxes paid but due in the following year. The

corresponding debit is to Account 1270, Prepaid

Taxes.

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4-37 5/92

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4370.2 REV-1

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6711 Payroll Taxes (Project\'s Share). This account

records the project\'s share of FICA and State

and Federal Unemployment taxes.

6719 Miscellaneous Taxes, Licenses and Permits.

This account records any taxes, licenses or

permit fees assessed the project and not

otherwise categorized in the 6700 Series.

6720 Property and Liability Insurance (Hazard). This

account records the cost of project property and

liability insurance. The account is debited

through journal entry when funds are not

escrowed by a mortgagee or when Section 202

projects deposit funds in a special escrow

account.

6721 Fidelity Bond Insurance. This account records

the cost of bonding project employees who

handle cash.

6722 Workmen\'s Compensation. This account

records the cost of workmen\'s compensation

insurance for project employees. The account

is debited through journal entry.

6723 Health Insurance and Other Employee Benefits.

This account records the cost of any health

insurance and other employee benefits paid and

charged to the project.

6729 Other Insurance. This account records the cost

of insurance not otherwise classified in the 6700

Series.

6800 FINANCIAL EXPENSES:

6810 Interest on Bonds Payable. This account

records interest paid or accrued on bonds

issued lo construct or permanently finance the

project.

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5/92 4-38

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4370.2 REV-1

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6820 Interest on Mortgage Payable. This account

records interest paid or accrued on a mortgage

issued to construct or permanently finance the

project. The account is debited through journal

entry.

6830 Interest on Notes Payable. These accounts

and record interest and discounts paid on short

6840 term (5830) and long term (6840) notes.

6850 Mortgage Insurance Premium/Service Charges.

This account records payments to the

mortgagee for insurance on the mortgage. In

the case of HUD-held mortgages, the payment

is in the form a service charge. At the close of

the accounting period, agent credits the account

for any premiums paid but due the following

year. The offsetting debit is to Account 1250,

Prepaid Mortgage Insurance.

6890 Miscellaneous Financing Expenses. This

account records financial expenses not

otherwise classified in the 6800 Series. If

necessary, agents should subdivide the account

into specific financial expense accounts

numbered 6891 through 6899.

6900 ELDERLY AND CONGREGATE SERVICE EXPENSES:

Accounts in this Series are use primarily by

projects designed for the elderly. The accounts

record expenses directly related to special services

provided the tenant (e.g., nursing expenses, drugs,

food, etc.). See Section 4-3 for a detailed listing of

service expenses in the 6900 Series. A schedule of

accounts in this series shall be attached to the

Statement of Income summarizing these expense

accounts.

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4370.2 REV-1

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7000 CORPORATE OR MORTGAGOR EXPENSES:

These accounts record expenses applicable to the mortgagor

entities distinguished from expenses necessary and reasonable to

the operation of the project. In addition, these accounts record

expenses for community shared facilities. Owners and agents

may charge expenses included in the 7000 Series against project

operations only with the prior written approval of HUD.

7110 Officers\' Salaries. This account records salaries

paid to officers for performing corporate duties.

It should also include the value of any services

given in an officer in lieu of a salary.

7120 Legal Expenses (Entity). This account records

legal expenses related solely to the corporation

or mortgagor entity.

7130 through 7132 - Taxes. These accounts record

federal and state income tax and other

corporate/entity taxes through expense of the

mortgagor entity for the tax year.

7190 Other Expenses (Entity). This account records

mortgagor entity expense items not otherwise

classified in the 7100 Series. The account

includes fees for preparation of federal, state

and local income tax returns for individuals or

limited partners, fees paid to partners other

than from available surplus cash and office rent

and supplies used exclusively for mortgagor

entity purposes.

7700 Trustee. This account records expenses paid to an

independent third party to manage the affairs of the

long term debt and protect both the interests of the

lender and the borrower.

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