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Security deposit withheld

Accounting Entries 423 views 1 replies

I am puzzled at this transaction, so i hope that someone can shed some light on this.

I have a client who I have agreed with on a 5% security deposit that they will withheld from every payment on every invoice and pay the accumelated security deposit when the contract concludes (+2 years)

Here is an example:

I submit an invoice for $500,000
I get paid $425,000
Client withhelds $25,000 as 5% Security deposit

I use an online accounting system (Zoho Books) so I reconcile the accounts with my bank transactions.
How do I enter this security deposit seperately from my invoices? Do I create a seperate invoice for it?

Thank you

Replies (1)

We can reduce the amount in Debtor's a/c as follows

Security Deposit A/c    Dr:

To: Xyz (Debtor) A/c     Cr

(Being the amount with held by the client)

If you have more clients adopting the same policy you can open the Securtity Deposit a/c itself Debtor wise to indentify easily.

 


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