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How to Book Forfeited Security Deposits in QuickBooks

Ruth,

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?

Thank you!!

Transferring funds from one bank account to another only affects the balances of the two bank accounts.

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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This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.

Ruth Perryman - QuickBooks Specialist Written by +Ruth Perryman

Ruth is the an Intuit Premier Reseller that offers great deals on QuickBooks POS and QuickBooks Enterprise. She has provided expert QuickBooks help to thousands of businesses all over the world since 1996.

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