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Mel114
August 8, 2022
Solved

Return of a Utility Security Deposit

  • August 8, 2022
  • 2 replies
  • 0 views

When opening a new account, our electric utility company charged $408.00 as security. I created an "Other Asset" account called Security Deposit and posted that line item on the bill when I paid it.  Here it is a year later and the company moved the Security Deposit to our monthly bill as a credit.  For the past few months, the bill has been "paid" by that credit.  We stopped service and there is $236.48 remaining of credit, which the utility company returned to us as a check.

I need to do a few things and I don't know how to make it all work:

1 - Make the $408 "Other Asset" zero.

2- Pay the open utility bills with that $408 "credit" so the ending credit is reduced to $236.48.

3- Show that the $236.48 was paid by the utility company and deposited into my checking account.

I am having difficulty basically turning an "Other Asset" into a "Credit".  I looked at using a General Journal entry but that doesn't allow to post the monies against the open bills.  

Thanks for the help if you have advice!

Best answer by Rainflurry

@Mel114 

 

1) To zero out the asset account, you want to create a journal entry: debit accounts payable, credit asset account for $408.  Put the utility company's name under 'Name' on the journal entry on the accounts payable line.  This will zero out the asset account and you will now have a $408 credit with the utility company.

 

2) Enter the bill for $171.52 and apply the credit to it.  This will leave $236.48 as an available credit.

 

3) To deposit the remaining credit into your checking account, create a journal entry: debit checking account, credit accounts payable for $236.48.  Make sure to put the utility company's name under 'Name' on the journal entry.

2 replies

Candice C
Candice C
August 8, 2022

Good morning, @Mel114. 

 

It's great to see a new face here in the Community. I hope your day is going well so far. Allow me to point you in the right direction to get this recorded properly in your QuickBooks Desktop account. 

 

Based on the details you gave, I recommend consulting with your accountant about these questions. They'll be able to give you the best advice for your business. 

 

Keep us updated on how the conversation goes with your accountant. It's my priority that you get this information into your QuickBooks Desktop account. I'll be waiting for your response! 

Rainflurry
RainflurryAnswer
August 8, 2022

@Mel114 

 

1) To zero out the asset account, you want to create a journal entry: debit accounts payable, credit asset account for $408.  Put the utility company's name under 'Name' on the journal entry on the accounts payable line.  This will zero out the asset account and you will now have a $408 credit with the utility company.

 

2) Enter the bill for $171.52 and apply the credit to it.  This will leave $236.48 as an available credit.

 

3) To deposit the remaining credit into your checking account, create a journal entry: debit checking account, credit accounts payable for $236.48.  Make sure to put the utility company's name under 'Name' on the journal entry.

    M
    Mel114Author
    August 8, 2022

    The thing I was missing is putting the Vendor name in the Name field---I was halfway there but your instructions were PERFECT!  It worked and it is balanced and everything is where it needs to be.  Thank you for taking the time to help, and to reply so quickly.  I appreciate it greatly.

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