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.
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:
The screenshot below shows you the last six steps.
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.
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.
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.
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.
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.
I'm in a similar predicament. However, I'm at the beginning. We just paid out a security deposit that we are expecting will be returned to us at the end of the least in several years. I'm unsure of how to properly record this so that it shows as money having left our account that we are expecting to get back. Do I "complicate" things and make it a long-term asset on the books; or do I just show it as a cashed check and then when the time comes where we receive it back just show it as a regular deposit?
I, too, am not an accountant so I'm just wondering if you received any direction on your question to help me understand where I should start with mine.
Thanks so much.
I appreciate you for joining the thread, @admin_danielle.
I can share with you additional information about recording security deposit and refund in QuickBooks.
Yes, you can record a deposit once you received the refund. Or, you can enter a vendor credit, then deposit the amount as suggested by RaymondJayO above. Moreover, I would recommend seeking assistance from a professional accountant. This way, he/she can help you with proper tracking of your transactions and selecting the appropriate accounts.
If you have any other questions, please let me know by adding a comment below. I'm always here to help. Have a good day!