How to Book Forfeited Security Deposits in QuickBooks
I think I may need help to fix some minor issues with my annual reports for one of my owners. In a nutshell, the issue is this:
The tenant moved out owing rent & there was major damage to the unit. The owner subsequently kept the entirety of his sec dep to apply towards repairs. I transferred his sec dep from the Security Deposit Trust account to the regular checking account once all bills became due and paid them out of that. I am thinking that I should have done this differently because, according to QB, the sec dep still shows up on the Balance Sheet under the Security Deposit Trust account. I don’t want to go back and change things because I reconciled with the Bank showing the xfer.
Further, I am having to run all Y/E reports for this owner under a “cash” basis to accurately reflect actual rent amounts received by owner/damages owed by previous tenant until owner decides to write-off since accrual basis doesn’t reflect actual, this is correct, yes?
You also need to transfer the security deposit out of the liability account and into a revenue account. The easiest way to do this is prepare a journal entry – debit the security deposit liability account and credit a revenue account (you might want to create one just for forfeited security deposits).
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