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Security deposit
we deduct a sum of amount form expenses payable to creditor as security deposit , eg 10000/- payable as labor payment to labor contractor, we deduct 10% as security deposit , and pay balance . plz tell me (1)entry for same, (2) head under which i kept security deposit {loan(libality) / or some thing else, (3) Accounting treatment ...
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Dear
Though its a deposit its not an asset for the firm since one day you haved to return the same.
Labour Expenses Dr 1,00,000
Security Deposit a/c Cr 10,000
Conractor a/c Cr 90,000
--------------------
Payment to Contractor
Contractor A/c Dr 90,000
Bank A/c Cr 90,000
-----------------------------------
Return of Security Deposit (Liability to the the firm)
Security Deposit a/c Dr 10,000
Bank A/c 10,000
Note :If you make the a/c head as Contractors head it will be easy if you have more than one contractor.
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