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KWalsh79
March 6, 2023
Question

Received a Security Deposit back that wasn't recorded on the books

  • March 6, 2023
  • 1 reply
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Hi - We recently moved offices after many years and received a check in the mail for our security deposit at the old office.  The problem is that the books do not show that we are owed a security deposit and this would have been well before my time here.  How do I book a prior period adjustment to create the entry that the security deposit should have had so I can take in this security deposit refund?

1 reply

Rainflurry
Rainflurry
March 6, 2023

@KWalsh79 

 

That's a great question.  If the bank account was reconciled properly when the security deposit was deposited by the landlord/management company, then there must have been a debit entry that most likely either increased an asset account or booked an expense.  Creating a prior period entry is just going to create other issues.  If you can't find anything on the balance sheet for that amount, I would create and deposit it into an Other Income account called "Security Deposit Refund' to offset the possible expense booked in a previous period.  Booking it as 'Other Income' will at least call it out at year-end and your CPA can determine the best way to handle it.  Just my $.02  

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