Hi,
We rent out commercial space and in our lease, it is specified that the security deposit is returned to the tenant at the end of the lease less the cost of any repairs we need to do to return the space back into it's original condition.
How would I account for the return of the security deposit which is less than what is is my on my financial statements?
For example, I received a security deposit of $25,000 5 years ago, which has been classified as a long-term liability. Now I have $5,000 of repairs to do and will only return $20,000 to the tenant. What entries would I do to pay the repairs from the security deposit and then remit the balance to the tenant?