Good day, Jack!
I'd like to clarify that the movements of funds between bank accounts and categories are recorded separately.
Yes, you can record a transfer from one bank to another if that happened in reality. However, this is just a plain transfer to show the movement of funds between bank accounts and cannot be used to pay the invoice.
What we want to achieve here is to also move the funds from the Other Current Liability account to the Accounts Receivable (Debtors) account so that we can apply it as payment to the invoice. I will guide you through the steps, but I highly suggest letting an accountant review the transactions.
Create a journal entry to move the funds from Other Current Liability to A/R (Debtors):
Pay the invoice using the created credits from the journal entry:
When you check your Tenant Security Deposits Held account, you should see the decrease from the journal entry we created.
With regards to the bank transactions, create a transfer to move the funds from the bank account that holds the funds to your bank account for rental deposits.
To sum this up, your liability is decreased, your customer's invoice is paid, and the movement of funds in the actual bank accounts is also recorded in QuickBooks.
If you have other questions in mind, please don't hesitate to go back to this thread.