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Scenario You
received a $500 check from your new tenant, Mike Madison, for the payment of
his security deposit. When the payment
was entered, it was misapplied to Mark Madison’s tenant ledger. The charge was eventually paid in full,
indicating that Mark has an additional $500 balance in security deposit; in
addition, Mike’s security deposit balance is showing $500 less than it should
be. Further,
the security deposits were entered in a prior period and since that period is
now closed, you cannot simply delete the payments and/or the incorrect
charges but should make adjustments with journal entries. |
Below are
the steps that explain how to transfer a security deposit from one tenant
ledger to another:
1.
Navigate
to the ledger of the tenant where the security deposit amount was
misapplied. Using our scenario that
would be Mark Madison’s ledger.
2. From the sidebar, click on New
Journal Entry. This opens the New
Journal Entry page.
a. Select the Security Deposit account
and enter in the Debit column the amount of security deposit to be transferred;
using our scenario that would be $500.
b. Select the Adjustments Account and
enter in the Credit column the same amount as the credit (i.e., $500).
c. For Ref #, enter “Transfer Security
Deposit.”
d. In the Comments box, enter a comment
indicating that the security deposit is being transferred to another tenant’s
ledger. Example: “Misapplied Security Deposit. Transferring to
correct tenant Mike Madison.”
e. When done, click Save.
The
Deposit Held section of the tenant ledger should now reflect a security deposit
amount less the amount being transferred.
For example, if the Deposit Held originally showed $1000, it should now
show $500; if it previously showed $500, it should now be at $0.00.
3. Navigate to the ledger of the tenant
where the security deposit should have been applied. In our case, that would be Mike Madison’s
ledger.
a. From the sidebar, click on New
Journal Entry. This opens the New
Journal Entry page.
b. Select the Adjustments Account and
enter in the Debit the amount of the security deposit being transferred. Again, using our scenario that would be $500.
c. Select the Prepayment account and
enter in the Credit column the amount of security deposit being transferred
(i.e., $500).
d. For Ref #, enter “Transferred
Security Deposit.”
e. In the Comments box, enter a comment
indicating that the security deposit was being transferred from another tenant’s
ledger. Example: “Security Deposit misapplied to Mark
Madison in error. Transferred to Mike Madison's ledger.”
f.
When
done, click Save.
4. If there is already a security
deposit charge on the tenant ledger (either unpaid or partially paid), skip to
step 6. Otherwise, create the security
deposit charge using the One-Time Charge button.
5. Click the Apply button to apply the
prepayment against the unpaid security deposit charge.
If there are other unpaid charges, be sure to apply the prepayment to the
Security Deposit charge.
The
Deposit Held section of the tenant ledger should now correctly reflect the
correct amount of security deposit for the tenant.
