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Owner of a property is a partner

10 April 2021

I am the owner of a property and I am looking to get into a partnership with 2 other partners. The intended rent is 15000 and deposit is 1lakh. How can I receive the security deposit of 1lakh and what shall be the entry in the accounts book? Also, can I show my capital investment in the form of the security deposit?

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12 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 10 April 2021

When a customer pays a security deposit, a business needs to record a security deposit liability. If the deposit is refundable within the a year, then the liability will be shown as a current liability, if not, then it should be shown as a long-term liability in the balance sheet.

Capital Investment may not be shown as security deposit

prasad Nilugal (3909 Points)
Replied 11 April 2021

Entry will be

Bank A/c Dr
To security Deposit A/c Cr
( Being security Deposit received ) .

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 11 April 2021

As I have already said, business needs to record a security deposit liability

f the deposit is refundable within the a year, then the liability will be shown as a current liability

For receiving

Bank a/c dr

To Security Deposit a/c

For liability creation

Cash a/c dr

To security deposit liability a/c

Mrinal Kurbetti (13 Points)
Replied 11 April 2021

Thank You for your answers.

Mrinal Kurbetti (13 Points)
Replied 11 April 2021

Originally posted by : Sourav
	As I have already said, business needs to record a security deposit liability f the deposit is refundable within the a year, then the liability will be shown as a current liability For receiving Bank a/c dr To Security Deposit a/c For liability creation Cash a/c dr To security deposit liability a/c Thank You for your answers. Although I have one small question. Can the deposit amount be received in Cash(1lakh)? Or does it have to be paid via cheque or bank transfer only?

Mrinal Kurbetti (13 Points)
Replied 11 April 2021

Thank You for your answers. Although I have one small question. Can the deposit amount be received in Cash(1lakh)? Or does it have to be paid via cheque or bank transfer only?

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 12 April 2021

U/s 269ST

Cash payment should be upto 10000 rupees in cash otherwise above 10000 rupees it should be in cheque, account payee bank draft, bank transfer etc. in a single day or in a single transaction.

Cash receipts is limited upto 200000 rupees otherwise above 200000 rupees it should be received in cheque, account payee bank draft or bank transfer etc. in a single day or in a single transaction.

Mrinal Kurbetti (13 Points)
Replied 12 April 2021

Okay Sir.

But how shall I pay the deposit amount to myself, as I am the owner of a property but also a partner in the firm. It is decided as all 3 partners will have an equal contribution of the capital. So in this case, do I have to transfer my share of deposit as a partner(33000approx) in the firm's bank account and then again receive the amount from the partnership firm as a deposit by cheque or bank transfer?

Will that not lead to unnecessary bank transactions whereas the end result is going to be that I am paying the money to myself?

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 12 April 2021

Option 1 may be the best option

Mrinal Kurbetti (13 Points)
Replied 12 April 2021

Sir, I didn't get a clear idea. Can you please explain which option should I opt for?

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 13 April 2021

The option may be that It is decided as all 3 partners will have an equal contribution of the capital. So in this case, do I have to transfer my share of deposit as a partner(33000approx) in the firm's bank account and then again receive the amount from the partnership firm as a deposit by cheque or bank transfer