Partial Security Deposit Refund

Hi there, Chris. The core issue is likely that the original sales receipt incorrectly recorded the deposit as income rather than as a liability, which is why the account won't balance properly.

A security deposit from a landlord’s perspective is set up as an Other Current Liability, since it represents money held on behalf of the tenant.  It’s a good idea to review the security deposit account register to ensure that the original deposit, any refunds, and any adjustments are consistently posted to the same account.

You'll also want to ensure that the Product/Service item used for the security deposit is mapped to your security deposit liability account. This way, any transactions involving that item will correctly increase or decrease the liability balance as intended.

In cases where everything is set up correctly, the balance will only clear when the transactions are properly offset against that same account. If different items or accounts are used, it can result in amounts remaining in the security deposit account. I also recommend consulting your accountant to ensure everything is accurate.

To enhance your experience with QuickBooks, our QuickBooks Live Expert Assisted team is available to help you manage your deposits and refunds.

If you have further questions, please don't hesitate to reply below. I'm here to help.

Hi @Jelayca V 

From what I can tell, the product item, sales receipt, credit memo and invoice all use the same account. 

Can you tell from the uploaded screenshot what I'm doing wrong, or are there additional things that would be helpful? I'll share another screenshot in a separate post since the max is one file. These are actual numbers in screenshot rather than the fictitious amounts shared earlier today. 

I have two rental deposits (so ignore the $1350). The one I'm asking about now had the deposit of $2,200. I returned 1725 and kept 475 to fix damages. 

Thanks

screenshot #2 @Jelayca V 

screenshot #3 @Jelayca V 

Hi, Chris. On behalf of my colleague, I'll be taking over from here. The reason your account did not zero out is that your transactions offset each other in Accounts Receivable. To fix this, create a Non-inventory item, set the Security Deposit account as a liability, assign it to both the income and expense accounts, then record a Sales receipt and an Expense to properly clear the balance.

Once the service items are set up, create a Sales receipt to record the security deposit collected from the customer and any return damage amount. Then, create an Expense using the same details as the sales receipt.

Thank you so much for the detailed response and screenshots.