Refundable Deposits

by Joey
(Canada)

I purchase building permit for $100.00. $20.00 of it is a deposit that I will recieve it back in a couple of months.


How do I enter the orginal purchase and how do I enter the $20.00 deposit when I get it back?



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Hi Joey,

The bookkeeping entry for your original purchase would be:

DEBIT (Increase) Building Permits (an expense account on your income statement) $80.00

DEBIT (Increase) Refundable Deposits (a current asset account on your balance sheet) $20.00

CREDIT (Decrease) Cash in Bank (a current asset account on your balance sheet) $100.00



When you receive your refundable deposit back in a couple of months, you would make the following bookkeeping entry:

DEBIT (Increase) Cash in Bank (a current asset account on your balance sheet) $20.00

CREDIT (Decrease) Refundable Deposits (a current asset account on your balance sheet) $20.00

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