Accounting for renovation escrow account

[David Cousens]

Hi Matt,

Your escrow account should probably be treated as an Asset:Bank:Escrow 
assuming that the funds are held in an account setup by your bank ( 
where that asset has been purchased by an increase (credit) in the 
Liability:Mortgage account.

An A/R account is not really appropriate here as it is generally 
associated with credit you have extended to your customers that is 
recoverable from them.

You would normally setup up an Expense:Renovation account, and as you 
pay for expenses out of your business checking account, you would have a 
transaction which is a debit for the amount to that expense account and 
a credit for the same amount to your checking account (i.e the 2 splits 
of the transaction).

When you reimburse your checking account from the Asset:Bank :Escrow 
account, the transaction will consist of a debit of the reimbursement 
amount to your checking account and a credit for the same amount to the 
Asset:Bank:Escrow account.

Hope this helps

David Cousens