when the tenant moves out or the landlord moves on
it's time to pay back the security deposits payable
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it's very simple to record paying back the security deposits to tenants
or landlords simply record one payment in the checks window
make sure you choose the security deposit liability or payables account instead of the
rent payout balances account like we learned in prior videos it's one entry that's it
for example let's imagine on march 17 candy moves out and requests her security deposit back
in this example we will imagine that she is not responsible for any of the march rent because
sometimes that happens check the tenant security deposit report to see how much we pay back and why
in this example you can see that part of her security deposit was applied to a past expense
so if i come over here to quickbooks and i open up the tenant security deposit payable
when i look specifically in the section of candy i can see that she did give us a security deposit
on march one but then on march fourth we had an expense that was applied to the security deposit
and we can even double click and we can even show her this invoice and mark it as a paid invoice for
the supplies that she cost us and we could even go back to the original check if we need to or we
can isolate the dates for this report and then filter it by just candy like we learned before
in order to give her a report that explains why candy is only getting six hundred fifty dollars
when we refund her security deposit and not the entire thousand
so if we agree that she will get the net amount with a printed security deposit report from the
amount on the report six hundred fifty dollars then the question is what will happen when we pay
well the tenants cash deposit trust account which physically holds the money will decrease because
the money is coming from the special bank account that we set aside for security deposits and being
given back to the tenant and of course the tenants security deposit liability payables account
will also decrease because that's supposed to show the balance of what we owe back to the tenants and
of course we no longer owe the tenant the security deposit because we're paying it back today
so what will happen in the trial balance when we pay back candy's security deposit
well the tenant security deposit which shows the balance of what we owe back to the tenants
will decrease by 650 and become 3000 because we owe 650 less because we're paying back now and
of course the account that physically holds the tenant's cash will decrease by 650 and become 3350
because we're physically taking this money and giving it back to the tenant so how do we
record this well it's very simple we can click the check window and the date was march 17th of 2022
and the tenant we're paying is candy under alan orbee the amount we're paying is 650
as per the report now be very careful the account you choose
in the bottom left in the top you have to make sure actually that you're physically taking the
money from the tenants cash deposit bank account click ok and then the account that reflects
what we owe back to tenants which is the tenant security deposit goes in the bottom of the window
so the money is coming from the special bank account to pay off the liability and that's the
way to think about it then when we click save and close we open the trial balance and you can see
the results are exactly as what we expected the tenant security deposit went down to
three thousand and the tenant's cash deposit decreased to three thousand three hundred fifty
however the most important report to check is the tenant security deposit report you can now
see that for specifically candy we now owe zero and we will pay back zero after this 650 check
and her balance in the security deposit report for this specific tenant is now zero
now let's see what happens when we pay back a landlord their deposit let's imagine on march 18
dave the landlord is no longer our client he requires his landlord security deposit back which
we called the operating deposit he will receive the net amount as per the landlord deposit report
so let's take a look at the landlord deposit report if we come here you can look at dave deeney
and you see dave is not getting 2 000 back for his security deposit dave is only getting 1300 back
for his security deposit and you can isolate dave by filtering by name like we learned
so that the report only shows dave and you could print it and give it to him
and that will explain why you can even double click and print the invoice as a paid invoice
applied against the deposit and it will show him the reason and if he really wants proof you can
go back to the original check and print him a copy of the actual receipt that you got when you paid
but either way he's only getting thirteen hundred dollars so what will happen at the moment we pay
well the cash and bank will decrease because we know that that is the bank account
that we chose to physically hold the landlord's deposit so we know that the money is coming from
the operating bank account and of course the landlord's operating deposit will decrease
because that account represents what we owe and we no longer owe the landlord the deposit if at this
moment we are paying it back so what will happen in the trial balance at the moment we pay back
the landlord security deposit well the landlord operating deposit decreases by thirteen hundred
so right now it's three thousand three hundred it will become two thousand because if we pay we no
longer owe thirteen hundred to that particular landlord and of course the bank account will
decrease by thirteen hundred because that's where the money's coming from and it will become
four thousand four hundred fifty and we pay it back exactly the same way we paid back the
tenant security deposit we click the check this time it's the 18th and we have to make
sure that the money is coming from the bank account that it was originally put in in the
case of the landlord we use the operating bank account just click ok and the amount we're paying
1300 now be very careful we must choose only the landlord and not any of the tenants under the
landlord and of course the account down here is the liability account landlords operating deposit
that's it that's all you have to put when we click save and close we can check the trial balance
and you can see the results are exactly as what we expected the landlord operating
deposit decreased to two thousand dollars and the operating account cash and bank decreased to 4450
and to be absolutely sure that everything is correct you should check the landlord operating
deposit report where you can see we owe dave deeney nothing and the reason we owe him nothing
is because it shows this check that we paid him on the 18th for the 1300 balance you