Refundable deposits are a common sight in various transactions, whether it's securing a lease or setting up a joyride on a $100,000 boat. Nick breaks down the nitty-gritty of how these deposits are handled on the books. Starting with how to record the initial collection of the deposit as "cash-restricted" and corresponding liability, he makes it clear how each transaction affects asset and liability classifications. Through engaging scenarios, including both partial and full deposit returns, Nick demonstrates the adjustments required on the balance sheet. Whether it's a landlord retaining a part of a security deposit for damages, or a boat rental company refunding the entire amount, the journal entries are explained clearly, making it easier to grasp practical applications of this concept.
Refundable Deposits Journal Entries
Refundable deposits are a common sight in various transactions, whether it's securing a lease or setting up a joyride on a $100,000 boat. Nick breaks down the nitty-gritty of how these deposits are handled on the books. Starting with how to record the initial collection of the deposit as "cash-restricted" and corresponding liability, he makes it clear how each transaction affects asset and liability classifications. Through engaging scenarios, including both partial and full deposit returns, Nick demonstrates the adjustments required on the balance sheet. Whether it's a landlord retaining a part of a security deposit for damages, or a boat rental company refunding the entire amount, the journal entries are explained clearly, making it easier to grasp practical applications of this concept.
Updated: May 25, 2024 Create an account