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?
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