Rent Deposit Accounting Journal Entry

A rent deposit, sometimes referred to as a tenancy deposit or security deposit, is an amount paid by a business to a landlord to be used in the event that the business fails to pay the rent or damages the property. The business needs to post a rent deposit accounting journal entry recording the amount paid as an asset as it is refundable when the property is vacated.

If the deposit is refundable within the a year, then the amount will be shown as a current asset, if not, then it should be shown as a long-term asset in the balance sheet.

Rent Deposit Accounting Journal Entry Example

Suppose a business rents premises and has to pay a rent deposit of 1,000 to the landlord. As the amount will eventually be refunded by the landlord when the business vacates the property, it is not regarded as an expense of the business and is instead recorded as an asset in the balance sheet.

The bookkeeping records will show the following rent deposit accounting journal entry.

Rent deposit accounting journal entry
Account Debit Credit
Rent deposit 1,000
Cash 1,000
Total 1,000 1,000

The rent deposit is an asset account representing an amount recoverable from the landlord at a future date.

The Accounting Equation

The accounting equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities plus the owners equity of the business. This is true at any time and applies to each transaction.

For this transaction the accounting equation is shown in the following table.

Rent Deposit – Accounting Equation
Assets = Liabilities + Owners Equity
– Cash + Deposit = None + None
– 1,000 + 1,000 = 0 + 0

In this case one balance sheet asset (cash), has been decreased by 1,000, and replaced by an increase in another balance sheet asset (rent deposit).

Popular mdct.ru Examples

The refundable deposit journal entry is one of many bookkeeping entries used in accounting, discover another at the links below.

Rent Deposit Accounting Journal Entry April 13th, 2017Team

You May Also Like


Related pages


fob shipperhow to calculate inventory turnover ratiocash flow cycle diagramstraight line depreciation formulaannuity payment formulaadjusting lower cost of market inventory on valuationjournal ledger entriescalculating markup vs marginperiodic costingasset turnover ratio exampleaccounting debits and creditsfifo perpetual inventory examplebad debt provision double entryformula for acid test ratiosundry in accountingwhat are the differences between revenue expenditures and capital expendituresinventory sale journal entryhow to calculate cogs from income statementaccounting debit credit charthow to calculate material price variancecash flow margin ratio analysisan nsf check is ahow to calculate present value of an annuitypmt excel examplecalculate finished goods inventorytypes of source documentsreceivable control account formatentries for direct labor and factory overheadlifo reserve definitionhow to calculate discount factor in excelgaap accounting for fixed assetssample voucher templateexamples of double entry journalslifo calculationjournal entries depreciationwhat does accrued salaries meanhow to do fifo methodasset turnover ratio calculatorhow to calculate cost of ending inventoryhow do you calculate retained earningsfixed assets turnover formulafixed asset registersaccelerated depreciation definitionstatement of comprehensive income samplepercentage completion revenue recognitioneffective monthly interest rate calculatorhow to calculate days sales in inventorycalculate mark upthe amount of a promissory note is called theinventory count templateaccounts recievable turnoverdouble entry bookkeeping tutorialfirst step in accounting cycledepreciation reducing balance formulafactoring accounts receivable with recourseannuity factor table excelclosing entries income summaryprepaid insurance journal entry adjustmentsprepaid accounting entrystable monetary unit conceptannuity formula excelmarketable securities on balance sheetinterest rate conversion formulaaccounting debits and credits cheat sheetwip inventory formulaeconomic entity principlecost of ending inventory formulamargin formula in excelexcel fv functiondouble entry for petty cashaccounts ledger templatecapital vs revenue expenditure