I had two tenants leave last year and I deducted a small part of their original security deposit for expenses and damages they caused. I have not reported that deduction as Income as of yet. Since I am now doing that return I could do so if I am supposed to. But my question is, if I don't do something about that deduction, will that effect my Balance Sheet? My beginning Security Deposits and Ending Security Deposits have changed with two new tenants. I just listed the new deposits being held at end of year on my balance sheet which is more than it was at the beginning of year due due to rent increases. My balance sheet is off and I don't know if it could be because of the deposit issue as I have checked all of my figures but may have overlooked something somewhere else.
Thanks
Rae
In your accounting records, you should have booked Security Deposit Income (a credit) and reduced Security Deposits Payable (a debit). If you had other transactions that affected your balance sheet, you may need to research this further.
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