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Sonia50
February 13, 2023
Question

Real Estate Transaction buyer deposit

  • February 13, 2023
  • 1 reply
  • 0 views

Here's the scenario:

We are a Real Estate Brokerage working for the seller. A buyer has made a deposit on the property that doesnt close until the end of Feb. The deposit is more than the commission so we will have to give money back to our seller. I want to know the following:

1. How do I record the deposit from the buyer (who is not our client)? Lets say its an even $500,000

2. Our commission is .. lets say $300,000 plus tax ($339,000)

2. Create an invoice to the Seller (Sellers Lawyer) for the remaining amount - in this case we will owe the Seller - $161,000

Please help!

1 reply

LeithG
LeithG
February 28, 2023

Hi Sonia50

 

1. Recording the deposit:

Debit: Bank Account (presumably this is held in some kind of Escrow account) - entire deposit amount

Credit: Accrued Revenue - your commission, marked taxable (will be converted from accrued revenue to real revenue when the sale goes through)

Credit: Accounts Payable - total less the line above

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