Escrow & Deposits
The General Ledger has two summary boxes labeled Escrow and Deposits that indicate the amount being held as security deposits and where the funds are recorded as being held.
Three situations are possible.
The amounts in each box are the same.
This is normal. It indicates the amount being held is all in an escrow designated bank account.
The amount in Deposit is more than the amount in Escrow.
This happens when the escrow payment is deposited in the checking account. It is included in the Cash box. The action required is to move money from the checking bank account (Cash) to an escrow bank account (Deposits) - both physically and by recording a transfer transaction in Bank to Bank.
The amount in Deposit is less than the amount in Escrow.
This happens when a tenant refund is processed and the bank account designated for writing refund checks is a non-escrow checking account. The action required is to transfer money from an escrow bank account (Deposit) to the checking account (Cash) - both physically and by recording a transfer transaction in Bank to Bank.
Note:
Escrow (security deposit) payments are expected to be in an escrow bank account. If you record payments for escrow as going into a non-escrow checking account, the system will recognize it and the Escrow and Deposits fields will not match. Remember that posting the transfer does just and only that - you must also make the physical transfer.
Example:
A tenant owes $1,000 for rent and $1,000 for security deposit and sends you one check for $2,000. You deposit it into the checking bank account. At this point the screen would show:
Balance 1,000
Cash 2,000
Deposits 1,000
Escrow 0
You then move the $1,000 security deposit to the escrow bank account. The screen would show:
Balance 1,000
Cash 1,000
Deposits 1,000
Escrow 1,000
Then you need to set aside $100 for the owner’s taxes. A journal entry moving the $100 to a tax holding (liability) account. The screen would show:
Balance 900
Liability 100
Cash 1,000
Deposits 1,000
Escrow 1,000
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