Deposits as Liabilities or other?

[Wouter van Marle]

On Mon, 2006-06-19 at 11:52 +0100, Ian S. Worthington wrote:
> 2. My wife's family, for whom this is for, rents widgets to a small
> number of people. To rent a widget during the day costs, say $40 and
> during the night costs $38.  In addition there is some sort of
> deposit/savings plan associated with each rental of $2, which is held
> against damages and returned at year end, or when the cutomer closes
> their account. (If you think this is odd, you're not alone.)
> 
> My first though was to create a Liability to each customer and split
> the money received to Assets:Cash and Liabilities:customer, but then I
> actually have more cash than the account shows.
> 
> Can someone suggest what the correct procedure here is?

Mmm... interesting one. Indeed a little odd, that deposit fund.
I don't think there is a single correct procedure: there may be more
ways to reach the same result.
That $2 is a liability indeed, but also a payable. While in your hands,
it is an asset, and ends up in your wallet (or in the old sock under the
bed or where-ever you keep your cash).
I would suggest the following tree:

+
+-+ Income (type: Income; for rental incomes)
| +- Unit 1
| +- Unit 2
| 
+-+ Expenses (type: Expenses)
| +- (your expense accounts)
|
+-+ Assets
| +- Cash (type: Cash)
|
+-+ Liabilities
| +-+ Deposits
|   +- Unit 1
|   +- Unit 2

Now if someone pays the $40 rent for Unit 1, you book $40 as received
Cash, and split that against $38 Income:Unit 1, and $2 that goes to
Liabilities:Deposits:Unit 1.

Note that this is not so much work as it seems; as every day you get the
rental payment for a certain unit, you just enter the name, and GnuCash
fills in the rest like the previous one, including the transaction
splits.
I split out the different units, so you can see immediately which unit
has how much in deposit, and which unit has brought in how much in rent.

Other assets (the value of the units themselves) of course end up under
Assets, etc. This way you should get the correct amount of cash (there
you book the full amount) and also the correct total income. And with
the expenses you can easily keep track of your cash flow and
profitability.

Good luck!
And, off topic, why not set up a dual boot to Linux or ditch Windows and
switch? Sounds much easier to me!

Wouter.