A simple accounting query

Refundable Security is a Current Asset So it is shown under Current Asset

ABC Security A/c Dr

    To Bank

Refundable Security is to b shown under current assets...and entry given by vikas is correct....

Thankyou for your reply,

but isn't there any way, We can show the amount in Assets and in Supplier's account withiout nullfying security deposit a/c.

ERP packages like SAP make it possible to show the amount both as a security deposit / advance and also in the vendor account.

This is made possible by using the special GL concept. As such the even though a sub ledger account which should normally be mapped to a main GL, will get by passed while posting using a special reference posting key and will be shown under advances instead of normal sundry drs. In case of a normal posting, this spl ref  is not used. Many other advances like salary advances, travel advances etc are normally tracked by the companies using this feature.

it is a current asset:--

Security Deposit Refundable (Current Asset)    Dr.       xxxxxx

                          To Bank A/c                                                            xxxxxx

(in narration give the details of security & supplier)

Also maintain a register for seculrity deposit or on a excel sheet in which u enter date of maturity & amt on maturity by this u can get back ur deposit unless u will forget to get ur security.

For general accounting (other than ERPs) can follow the following:

In liab. side create "Security Deposit - Reserve" a/c.

For each SD create the following entries:

Dr.   XXXXX party in Sundry Creditors SD - sub ledger A/c

Cr    Bank A/c

One more JV as below:

Dr   XXXXX party in Sundry creditors - subledger A/c (in this subledger you will be carrying out your     regualr purchase and payment trans)

Cr   XXXXX party in Securtiy Deposit - Reserve - sub ledger A/c

Here all your problems are solved:

1. Security Deposit is intact.

2. Your creditors show supplies less SD  that is the thing you wanted isn't it

3. At year end you can set off or add the SD subledger total to Sundry Creditors for BS purposes.

Originally posted by : Balakrishnan
	For general accounting (other than ERPs) can follow the following: In liab. side create "Security Deposit - Reserve" a/c. For each SD create the following entries: Dr.   XXXXX party in Sundry Creditors SD - sub ledger A/c Cr    Bank A/c One more JV as below: Dr   XXXXX party in Sundry creditors - subledger A/c (in this subledger you will be carrying out your     regualr purchase and payment trans) Cr   XXXXX party in Securtiy Deposit - Reserve - sub ledger A/c Here all your problems are solved: 1. Security Deposit is intact. 2. Your creditors show supplies less SD  that is the thing you wanted isn't it 3. At year end you can set off or add the SD subledger total to Sundry Creditors for BS purposes.

Sir; We are supposed to raise the Security Deposit under Current Assets. the entyr you mentioned, I think do not take care of the said requirement at all.

AGREE WITH PULKIT.......

Dear students above,

The querist wants to show  the SD in two places ie., 1)in SD and 2) in Crs a/c itself.

Pl ready my reply carefully:

By entry:

1) I have debited the SD a/c which is a current asset and i am not touching it at all.   it will remain as a

     SD forever till it is refunded or forfeited.

2) as per wishes of querist, the same is again posted to his sundry creditors a/c by creating a

     corresponding reserve a/c.   This is for a/cing purposes.   For year end consolidation this reserve

     a/cs. should not be taken as it is.   So that i have adviced to either set off or add back to sundry

     creditors total balances for BS purposes

      My spl appreciation to Pulkit, Harinder and Ajai.  Wish the all the best.

      The suggestion to maintain in XL sheet is not appreciated, since that solution is always there.

      The query is posted not to get a simple solution.  

      The solution should always be system oriented.   error free.    any time retrievable.    and at the

      same time should not overrule the basic principles at least from the year end point of view.

Thank you Balakrishnan Sir;

A lot of Thanks for your time and efforts in clarifying my query.

1-When security is given to supplier-

Security deposit with ---    (Current Assets) a/c   Dr.

                         To Bank/Cash a/c

2- When goods is purchased from supplier-

 Purchase a/c             Dr.

                        To Supplier 's a/c

3- When security is adjusted from due -

   Supplier 's a/c            Dr.

           To Security Deposit with--------( Current Assets)

                                   or

4- When payment is made and thereafter security is refunded-

       (a) Payment--------

          Supplier 's a/c                 Dr.

                  To Cash/Bank.

          (b)Security Refund---------

          Cash/Bank   a/c              Dr.

                            To Security Deposit with------------(Current Assets)