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Level 1

Handling Returned Security Deposit Checks

We are a non-profit operating on cash basis. How should we properly account for short-term security deposits in QBO, such as for a facility rentals, when the deposit check we have written is returned to us or destroyed? When the original check is cashed and a new check reissued, it's quite obvious how to handle it.

 

Currently, we write the deposit check (not a bill payment) from the bank and increase the "Security Deposits" (Other Current Assets) account, then void the check when it is returned or confirmed destroyed. However, in doing that, we lose the original amount information unless it is rewritten into a note field.

 

Is there a more "proper" way to do this? I have reviewed the articles on bounced checks, but they only half apply in this case. Assuming there is a better way, how do I handle the uncashed check during bank reconciliations?

 

Thanks for your help!

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Best answer 01-03-2019

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Level 15

Handling Returned Security Deposit Checks

Treat the "destroyed/returned" the same as a Deposit. Deposit back to the other asset account. Now the check and this deposit clear against each other next reconciliation and net 0, but you have Both Transactions for reference.

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Highlighted
Level 15

Handling Returned Security Deposit Checks

Treat the "destroyed/returned" the same as a Deposit. Deposit back to the other asset account. Now the check and this deposit clear against each other next reconciliation and net 0, but you have Both Transactions for reference.

View solution in original post

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