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Level 1

Help recording security deposit and refund for an office lease

Hi there,

 

I am new to quickbooks and would need some help with the following scenario:

 

My company (C-Corp) rented an office space and paid a security deposit ($5000). I recorded this as a prepaid expense in an account called Security Deposit Receivable. Thus, it became a current asset on my balance sheet (current assets because the lease was short term - 6 months). A few months later I received a partial refund ($4700). How do I record that partial refund I received so that it lowers the current asset on my balance sheet? And how do I deal with the amount that has not been refunded?

Thanks a lot in advance.

 

- David

3 Comments
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Moderator

Help recording security deposit and refund for an office lease

Welcome to the Community, @DavidFriedl. I'm here to ensure you're able to record the partial refund of your security deposit and its remaining amount in QuickBooks Online (QBO). 

 

You're on the right track in setting up a current asset account called Security Deposit Receivable for the $5000 security deposit. Since you've already received a $4700 partial refund, let's first enter a vendor credit. It helps ensure this will hit the expense account you've paid to the property owner. Then, make a bank deposit to record the refund. After that, use Pay Bills to link the bank deposit to the vendor credit. This way, it lowers the current asset balance on your Balance Sheet report. I'll guide you how. 

 

To enter a vendor credit: 

  1. Go to the + New button from the left menu. 
  2. Select Vendor credit under Vendors
  3. Choose the landlord from the Vendor drop-down. 
  4. Enter the Category details or Item details depending on how you record purchases with the property owner. 
  5. Click Save and close.

 

To deposit the money you got from the refund: 
  1. Go to the + New button from the left menu. 
  2. Click Bank deposit under Other
  3. Select the account in the Account drop-down.
  4. Go to the Add funds to this deposit section. 
  5. Choose the Vendor in the Received from column. 
  6. Select Accounts Payable to tie the refund to the vendor credit. 
  7. Choose the Payment method
  8. Enter 4,700 as the refund amount.
  9. Click Save and close.

 

The screenshot below shows you the last six steps.

BankDepositToRecordPartialRefund.PNG

 

Once done, let's select Pay bills under Vendors from the + New menu. That way, you'll be able to link the bank deposit to the vendor credit. You’ll see the $4,700.00 amount in the Credit Applied field, and the Payment should be $0.00. It keeps your vendor expenses accurate in the software. The screenshot below serves as your visual guide. For the detailed instructions, see Step 3 through this article: Enter A Vendor Refund

PayBillsToLinkTheBankDepositAndVendorCredit.PNG

 

After that, let's run the Balance Sheet report. When you click the amount for the Security Deposit Receivable account, its transaction report opens. You'll be able to see the decrease from its original balance from $5,000 to $300. You can also click Customize to get the specific information you need for your business. View the screenshot below for your visual reference. 

TransactionReportFromBalanceSheet.PNG

 

For your second concern, you can enter a note for the remaining $300 amount from the vendor's profile in the meantime. It reminds yourself whether it'll be refunded or not in the future. 

 

If you'll receive the refund from the property owner, create a vendor credit and a bank deposit so you can link them. Just repeat the process above. If not, I'd suggest creating a journal entry for the $300 difference. With this, you'll need to consult your accountant to determine the appropriate accounts in the Debit and Credit columns. That way, we can ensure your books will remain accurate. 

 

You can always go to the Transaction List of the property owner. From there, you can view, edit, copy, print, void, or delete their transactions. Doing so will help you efficiently manage your vendor transactions in QBO. For more details, visit this article: How To View All Transactions For A Vendor

 

I'll be right here to help if you need anything else. Wishing you and your business continued success while using QBO, @DavidFriedl

Highlighted
Level 1

Help recording security deposit and refund for an office lease

Hi,

If the difference will be receivable, then don't do anything. If they have deducted for some reason and if you assume it will not come back then you can pass the JE for the difference as rent expenses and credit to Security Deposit Receivable account.

 

Highlighted
Level 1

Help recording security deposit and refund for an office lease

Hello,

My question is similar to the one in the original question. I paid a security deposit in 2010 and it was refunded to me in 2019. I'm new to quickbooks and have only used it to keep track of my banking transactions. I am not an accountant and I am clueless on where to put this refund. Thanks in advance for any help you can offer.

 

Regards,

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