Common Journal Entry Scenarios

This article provides practical examples of when and how to use journal entries.


If you are not familiar with journal entries in general, please first read:
Understanding Journal Entries (General Guide)

Scenario 1: Transferring a Tenant Deposit to a New Tenancy

Use case
A tenant moves from one property to another and asks for their existing deposit to be transferred to the new tenancy instead of being refunded.


Steps


Important: First make sure to release the deposit from the old property, and create the deposit for the new property.


  1. Open the Journal Entry window.

  2. Enter a description (optional).

Create the outgoing transaction

  1. Click Add Transaction.

  2. Select Tenant Outgoing Payment.

  3. Find the tenant.

  4. Click on Apply next to the tenants name.

  5. Select Apply to multiple.

  6. Enter the full amount of the deposit in the Amount box

  7. Apply the amount to the virtual payment from the deposit release.

This creates the debit side of the journal entry.

Create the incoming transaction

  1. Click Add Transaction.

  2. Select Tenant Incoming Payment.

  3. Select the tenant for the new tenancy.

  4. Click on Apply next to the tenants name.

  5. Apply the amount to the outstanding deposit invoice.

The journal entry now balances.
The deposit has moved from one tenancy to another with no cash movement.


Scenario 2: Holding Deposit Offset Against Letting Fee

Use case
A letting agent has:

  • Collected a holding deposit from a tenant

  • Issued an invoice for their letting fee

Instead of paying the full fee and separately collecting the deposit, the holding deposit is offset against the letting fee.

Steps

  1. Open the Journal Entry window.

  2. Enter a description (optional).

Record the tenant payment

  1. Click Add Transaction.

  2. Select Tenant Incoming Payment.

  3. Select the tenant.

  4. Apply the amount to the outstanding invoice.

Offset the supplier payment

  1. Click Add Transaction.

  2. Select Supplier Outgoing Payment.

  3. Select the supplier.

  4. Apply the amount to the outstanding supplier invoice.

This settles the letting fee and records the holding deposit without moving funds.


Scenario 3: Moving Funds Between Landlords

Use case
Funds need to be reallocated from one landlord to another.

Steps

  1. Open the Journal Entry window.

  2. Enter a description (optional).

Remove funds from the first landlord

  1. Click Add Transaction.

  2. Select Landlord Payout.

  3. Select the landlord you are taking funds from.

  4. Apply the amount.

Add funds to the second landlord

  1. Click Add Transaction.

  2. Select Landlord Deposit.

  3. Select the landlord receiving the funds.

  4. Apply the amount.

The journal entry balances and the funds are correctly reallocated.



Scenario 4: Tenant pays rent directly to landlord

Use case
The tenant pays rent directly to the landlord, bypassing your accounts, but you still want to charge the landlord a commission on that payment.

Steps

  1. Open the Journal Entry window.

  2. Enter a description (optional).

Create the outgoing transaction

  1. Click Add Transaction.

  2. Select Landlord payout

  3. Select the landlord.
  4. Put the amount in the Amount box (same amount as tenant paid).
  5. Apply the amount next to the correct property.
  6. Save and close.

This creates the debit side of the journal entry.


Create the incoming transaction

  1. Click Add Transaction.

  2. Select Tenant Incoming Payment.

  3. Select the tenant.

  4. Apply the amount to the invoice that was paid to the landlord.

The journal entry now balances the rental invoice as paid, deducts the amount from the landlord’s account, and applies the commission as usual—without any cash movement.