General Journal entry from rental property management statement

jdgaudin · ‎May 16, 2023

We have a property manager for a new long term rental property we acquired. The first statement from them lists the rental income, expenses, management fees that also includes a $500 debit to create a reserve on the account, and our owner distribution amount. However, the debit and credit entries do not balance. It is off by $500, see below::

Credit Debit
Rental Income $10,229.03
Repairs $1,678.22
Management leasing/fees $4,606.21
Management fees (reserve) $500
Owner distribution $2944.6
Totals $10,229.03 $9,729.03

Not sure how to correctly make it balance on the general journal entry to record this in Quickbooks, what additional debit entry is needed, what am I missing here? Thanks for any help.

Rainflurry · ‎May 17, 2023

@jdgaudin

To help with this, I would need to see the statement. Can you post a snip of the statement with any personally identifying info removed?

jdgaudin · ‎May 18, 2023

Well when I downloaded the statement again from my property manager's website it's recorded differently now, see attached statement. I understand the $4200 balance is the $3700 security deposit and $500 reserve, but still don't know how to record the transactions correctly to account for the reserve. Thanks for your help!

Rainflurry · ‎May 19, 2023

@jdgaudin

With all due respect to the management company, that is a confusing report to provide to property owners. In any case, the proper journal entry to record all of that is below. The only caveat is if the security deposit will be applied to the last month's rent, it needs to be included in income for tax purposes.

	Debit	Credit
Cash	4,200.00
Mgmt Reserve	500.00
Repairs	2,183.03
Mgmt Fees	3,801.40
Owner's Draw	2,944.60
Rental Income		9,929.03
Security Deposit Liability		3,700.00
	13,629.03	13,629.03

Or, create a bank deposit and assign the debits (except cash) a negative amount and the credits a positive amount. That will leave a $4,200 deposit which is the cash balance.

jdgaudin · ‎May 19, 2023

Ok great, thanks for your help! And I emailed the property manager yesterday about how confusing the statement was and asked if the format could be cleaned up.

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General Journal entry from rental property management statement