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SG123
June 27, 2023
Question

How to book retention of security deposit in desktop

  • June 27, 2023
  • 1 reply
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I am using QBs Desktop. My company received a security deposit from a tenant that was renting real estate, the deposit was for my company to use the funds toward real estate damages or non-payment of rent at the end of the lease (if any). The security deposit money was initially booked as a long-term liability to my company (my company owes the tenant this money back if no damages and rent is paid in full). At the end of the lease, I did not return the deposit due to damages to the property. This is no longer a liability, it is income. How do I take the deposit amount from Long Term Liabilities and make it income? Can someone please give me step-by-step instructions? Thanks in advance!

1 reply

MariaSoledadG
MariaSoledadG
June 28, 2023

Let me guide you on how to record the deposit amount and convert it as income, SG123.

 

A clearing account, also known as a wash account, is a temporary account in which the funds are kept to get smoothly transferred to the required account when the transfer cannot be done directly from one account to another. It also helps the clients set aside a sum of money when transactions are in process. 

 

Generally, you can create a clearing account. This is where you'll move the funds from your Long Term Liability account. To create one, follow the steps outlined below:

 

  1. Go to the Lists menu, then select Chart of Accounts.
  2. From the Account ▼dropdown, select New.
  3. Select an account type, then select Continue.
  4. Complete the account details.
  5. Click Save & Close.

Once done, transfer the money from the Long Term Liability to the clearing account. I'll show you how:

 

  1. Go to the Banking menu. Select Transfer Funds.
  2. Enter the date of the funds transfer into the Date field.
  3. Then, choose the bank account to transfer funds from by using the Transfer Funds From drop-down.
  4. Pick the name of the account to transfer the funds into by using the Transfer Funds To drop-down.
  5. Enter the amount of the transfer into the Transfer Amount field.
  6. Hit Save & Close button to record the fund transfer and close the window.

 

However, I still recommend reaching out to your accountant for other ways how to record the security deposit.

 

Furthermore, QuickBooks allows you to customize the report you generate to ensure you'll get the data you need most. For more information, go through this article: Customize Reports In QuickBooks Desktop.

 

Mention my name if you have any questions when recording transactions in QuickBooks You can also post your questions here in the Community. We're here to assist you 24/7.

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