@Chesaning Realty wrote:
I am a real estate broker using QB Mac 2016. I have a bank account for Earnest Money Deposit for purchase of real estate. I deposit Earnest Money Deposit into this bank account and hold them until:
1. It is given back to customer
OR
2. It is transferred to my checking account and paid out as commission. The title company will deduct the Earnest Money that I am holding from commission pay.
I currently have my QB set up as
Bank Account - labeled Earnest Money Deposit
Chart of Account labeled Earnest Money Deposit - Other Current Liability
I transfer from Bank Account - Earnest Money Deposit to
Bank Account - Checking Account
using account - Earnest Money Deposit - Other Current Liability
THEN in my Bank Account - Checking Account I go back and change that to
account - Income
OR account - Earnest Money Deposit refund
This seems so complicated and I'm thinking there would be an easier way to track this.
My accountant said I do not need the Earnest Money Deposit Bank account I would just use the chart of account but I need to transfer these funds between actual bank accounts. He said I should never be making general journal entries for these funds.
I do NOT invoice customers for these funds. I am only holding these funds. Please HELP
When you receive money and deposit it (apparently from your description to regular checking and then transferred to the deposit account) you are already posting the current liability. That happens only in the initial receipt of funds to you regardless of the eventual landing spot for the money. Now what you do with it between physical bank accounts is just a transfer. Desktop for PC has under the banking tab an actual Transfer option, if your mac version has that use it for movement of funds between the two accounts both forwards and backwards. When you cut a check to return the deposit you post again against the liability account.
In scenario 1 since the movement from the escrow account back to checking is just movement it is just a transfer and the check you write is against the current liability.
In scenario 2 you still move it out of the escrow account and it sounds as if you get to keep all or a portion against other charges or income in the settlement HUD-1. You can record, in the commission check, the release of the entire liability, less what you retain as income for a net commission payment.
It can look like this:
Check for $5000
detail>
Earnest Money Liability $10,000
Income to you ($15000)
Commission to agent $5000
