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 ...
Replies (1)

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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