What is the journal entry to record a refundable deposit?
Since a refundable deposit is cash that must be returned to the customer in the future, the company should debit restricted cash and credit the customer deposit liability account. When the deposit is returned to the customer, the customer deposit liability account is debited, and restricted cash is credited. There is no income statement impact.
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Are refundable deposits included in cash and cash equivalents?
Yes, but the deposit is considered restricted cash and may be recorded separately as an asset on the balance sheet. Refundable deposits represent restricted cash because the money must be returned to the customer at a future date. The easiest example is a security deposit that you pay your landlord at the start of the […]