do you need to apply property expenses to the tenants or the landlord's security deposit
well then make sure you watch this video applying security deposits to property related expenses
if you have any questions about this topic you can leave them in the comments section below and i'll
do my best to help you and of course if you feel the video helped you i hope you will click like
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any property related expenses that are necessary to be paid in order to keep the landlord
in compliance with their lease agreements and property regulations are paid by us
the management company up front we could withhold the expense from the landlord's next payout
and show it on the statement the way we learned in previous videos
or we could deduct this payment from one of the two types of security deposits
for example on march 4th we paid staples 350 dollars for supplies as a result of candy charles
who is a tenant under the landlord alan arby only candy not alan is responsible for these supplies
therefore they will be deducted from her security deposit balance so what are the steps
to apply the security deposit to expenses well there's the first part which we're about to do
and it's very simple we record the payment of the property expense in the right checks window
we make sure that we select the specific tenant that the expense is applied to
and you must make sure that you check it as billable to that tenant or that landlord
and then you must type the reason in the memo field so what will happen after step one
well supplies expense will go up because quickbooks thinks that it's our supplies expense
and cash and bank obviously will go down because we just paid property related expenses
quickbooks doesn't know yet that the landlord or the tenant will be responsible for that check
after we do step two so what will happen in the trial balance after step one well
we have less cash in bank so cash and bank will decrease to 6450
for the amount that we physically paid and the computer thinks that we have the supplies expense
so supplies expense will increase to 350 dollars
we open the checks window and we make sure that the date is fast forwarded to march 4th of 2022.
the company whom we're paying is staples and we're paying them 350 dollars
notice quickbooks remembers that staples goes with supplies expense and in this case we agree
the most important part is to choose the specific landlord or tenant that the money is responsible
for and notice it's checked off as billable by default we're almost ready to save this check
but remember we have to put a memo if we're going to put it on an invoice later so the explanation
will flow through to the final invoice and to the deposit report so we must type in the memo field
the explanation might be in your real situation but
don't forget to type in this memo field as your last step
so that ultimately you can see the reason printed clearly on the security deposit report
so we click save and close and the result in the trial balance is exactly as what we expected
cash and bank went down to six thousand four hundred fifty and supplies expense
our supplies expense is temporarily showing at three hundred and fifty dollars
now that we've written the check we must do the same
second step that we learned about in prior videos when we previously learned how to apply
property related expenses to the landlord's payout balance now we're doing step two in the same way
but we're applying it to the tenants deposit so we must immediately make an invoice for that
landlord's or that tenant's expense we must add the check payment that we just recorded
to that invoice and then we must copy the description field into the memo field
to make sure that the information flows through to the final report and then of course we save the
invoice now what will happen in the trial balance after part two well our supplies expense will go
down because part two indicates that we are no longer responsible for these supplies because
we're billing our tenant for it and of course the management company no longer has supplies expense
but of course the security deposit of the tenant will decrease because now the tenant
is responsible and will therefore receive less of their security deposit returned
on the day that they move out so what happens in the trial balance after we make this invoice well
our supplies expense will disappear because the computer now knows that we are not responsible
for that and the tenants security deposit which is right here will decrease by the amount of the
expense because we now owe less to the tenants in future payouts of paying back the security deposit
because we just applied some to the expenses that they're responsible for so this is how we make the
final step we click invoice now notice as soon as we choose the specific tenant that is responsible
for this expense we get this message and don't worry you can click ok and choose the expense
that you just put and if you lost the box don't worry you can get it to come back by making sure
that you have the ribbon open and in the main section of the ribbon click add time and cost
to get the billable cost box to return so we click expense and we choose the specific expense that we
are putting on this invoice and we click ok notice the information flowed through from the check but
to make sure that it flows through to the report we copy it like we learned in a previous video
and we put it in the memo field so that the deposit report shows clearly what this was lastly
the most important thing you need to know about this invoice this invoice is not being applied
to a landlord's rent payout and this invoice is not being applied to the landlord's deposit
this invoice is being applied to the tenants security deposit so you have to make sure if
you're making an invoice for the security deposit or for an expense that will you know be applied
to the security deposit you must choose this account now when you click save and close
and you don't forget to remove the stupid email thing save now the results in the trial balance
are exactly as what we expected we no longer have supplies expense because we have to pay 350 less
to the tenants when we pay back the security deposit and that's why their balance is 3650.
the most important part to look at is not the trial balance the most
important part to look at after step two is this report tenant security deposit
if you look at candy you see that on march 1 she gave a thousand dollar security deposit
but you see on march 4th we have this invoice that lowered the amount that we're going to pay back by
350 dollars and that's why she's only getting back six hundred fifty dollars on the day she moves out
notice that it doesn't have the column for memo so let's take care of that right now customize
display let's make sure that just like the rent report we have a memo here and notice
the memo field tells us the reason why so if we set up this security deposit report to include
the memo field we can see she paid us the thousand dollars on march one we can double click and we
can go right back to that payment and we can even look at the copy of the check if we want to
but then we can open up this invoice that says we lowered the security deposit for this reason
candy cost us these supplies and we can double click and go right back to the invoice and we
can even take a look at the uh attachment if we want to to see the receipt of the invoice
if you scanned it in and this clearly explains to candy why she is only receiving 650 dollars
now in our second example we will show how to apply a landlord's deposit to a property
related expense let's imagine on march 16 we paid seven hundred dollars to paula the plumber
to fix the sink in freddy froda's apartment and freddie is a tenant under dave deeney now
let's imagine that in this case dave the landlord is responsible for this repair
and not the tenant therefore it will be deducted from his security deposit balance
so what will happen after the first step when we record paying this property expense well
repair expense goes up and cash goes down repair expense goes up because quickbooks doesn't know
yet that the landlord or the tenant will be responsible it thinks we will be responsible and
that's why it will record our company's repair expense and then of course cash and bank will
go down because we physically paid the money so what happens in the trial balance after step one
well our repair expense will show up in the trial balance for 700 temporarily after the first step
and of course because we have seven hundred dollars less in cash the balance of the bank
account goes down to five thousand seven hundred and fifty dollars let's go ahead
and record the check it's a check and it's a check on march 16 and it's a check to paula the plumber
remember if she's not on the vendor list you can click add new vendor and just type in her name
and spelling doesn't count most importantly we paid her seven hundred dollars
and the reason was because of repair expense
and this is not billable to the specific tenant remember the landlord is responsible
and it will come out of the landlord's deposit not the tenant and by default it's marked as billable
don't forget to put a memo so that the reason for this check can flow through
to the invoice and the reason for this check can flow through to the final report and you put uh
you know you put whatever you want and then you click save and close now the results and
the trial balance are exactly as what we expected repair expense showed up for seven hundred dollars
and cash and bank decreased by the amount we paid to five thousand seven hundred fifty
and now we'll do part two bill the landlord deposit for the expense that we just paid
so what will happen when we actually make the deposit of the landlord responsible for
the property expense well our repair expense will go down because the management company no longer
has repair expense the client is responsible and therefore their operating deposit will decrease
because now we have to pay them back less of a security deposit because of that property expense
so what will be the numbers and the trial balance after step two well we will no
longer have repair expense because the client is responsible and because it's coming out of
the landlord's operating deposit we now owe 700 less to the landlords for their operating deposit
when we go to pay them back in the future and it decreases to three thousand three hundred
and we make it the way we learned before we open the invoice and on the exact same day we bill the
landlord not the tenant the landlord because in this example the landlord is responsible
now we click ok to get the expense choose it just like we've been doing all along and you see it
comes up here and the most important thing is to copy the information into the memo field so that
it flows through to the final report and speaking of the final report the most important thing to
check we save for last this is not coming out of the tenant security deposit it's not coming out
of the normal rent payout this is coming out of the landlord's operating deposit so we make sure
that that is the account that's chosen so that everything works perfectly save and close you got
to remember to uh save and close and now you can see the results and the trial balance are exactly
as what we expected we no longer show repair expense because our landlord client is responsible
and you can see their operating deposit has decreased by the amount of expense we applied
but the most important report is this one the details of the operating deposit for the landlord
if we click here and we look at dave we could say look dave on march one you did give us
two thousand but you see on the other hand on the sixteenth we had to pay seven hundred dollars
and when you double click you can see that you replaced the old sink and that's the reason why in
fact we actually forgot to put the memo field on this report so that you can see this information
clearly showing on the report when we print it for dave
so you can click customize report and add the memo field and now that you've added the
memo field it's clear what the reason was for the decrease in the deposit balance for dave
and if you want to print this and give this just to dave you can further customize the report and
filter press the letter n for name and choose only just dave and click ok and now you can see this
report shows only dave why he's only getting 1300 back if he quits and leaves us tomorrow
you