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Michael McAvoy
March 18, 2024
Question

How to Record Issuing A Damage Deposit for A Customer in QBO

  • March 18, 2024
  • 2 replies
  • 0 views

Hello all,

 

My company assists with paying for sustainable housing for hard done by people. We receive grants from government agencies and pay for hotel rooms, rent and damage deposits with said cash on our clients' behalf. 

 

The only one I'm struggling with is how I should be entering the damage deposits. Currently they are listed as cheques that we issued but I know that isn't right since they will just sit as an unreconciled cheque for who knows how long. 

 

Should they be entered as a liability instead?

 

Any help you could provide would be greatly appreciated. 

 

Thank you in advance. 

2 replies

L
LouiseG12
March 18, 2024

I'd be glad to walk you through the procedures on how you can record damage deposits in QuickBooks Online, Michael.

 

Yes, it should be entered as a liability. To record issuing a damage deposit for a customer in QuickBooks Online (QBO) when assisting with sustainable housing. Here's how:

 

  1. Go to Gear icon, then select Chart of accounts.
  2. Select New.
  3. From the Account Type dropdown menu, select Other Current Liabilities.
  4. From the Detail Type dropdown menu, select Trust Accounts - Liabilities.
  5. Enter a Name for the account or accept the suggested name.
  6. Select an option from the When do you want to start tracking your finances from the account in QuickBooks? dropdown list.
  7. Select Save and Close.

 

For more thorough instructions, check out this article: Record a retainer or deposit. 

 

On the other hand, it's best to consult your accountant so they can guide you on how to properly enter them in QuickBooks Online.

 

Additionally, I'll leave these articles for future reference: 
 

 

Leave a comment below if you need more help. We'll respond as soon as we can.

Rainflurry
Rainflurry
March 18, 2024

@LouiseG12 

 

"Yes, it should be entered as a liability. To record issuing a damage deposit for a customer in QuickBooks Online (QBO) when assisting with sustainable housing."

 

That's incorrect.  You can't have a liability when you issuing a payment - both are credits in double-entry accounting.  A liability is when you owe money, goods, or services to another entity.  

Rainflurry
Rainflurry
March 18, 2024

@Michael McAvoy 

 

Why won't those checks clear?  If you're paying for a damage deposit that you expect to get back, they should be recorded as an asset.  You can issue checks for them and reconcile them when they clear.  When you receive a damage deposit back, assign the same deposit asset account to the bank deposit that you assigned to the check.  These are not liabilities unless you are receiving the damage deposits.  

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