How to Record Earnest Money for Property Sale
Records the receipt of a refundable or non-refundable deposit from a potential buyer of an investment property.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash - Escrow | Asset | 250,000.00 | - |
| Deposits Held in Escrow | Liability | - | 250,000.00 |
💡 Accountant's Note
Cash received is restricted and recorded as a liability until the closing occurs or the deposit is forfeited or returned.
Practitioner & Systems Framework
💻 ERP Architecture
Assign a restricted cash code and a specific liability sub-account for the buyer.
⚠️ Audit Flags
Failure to reconcile escrow accounts with third-party escrow agent statements.
📄 Required Documentation
Purchase and Sale Agreement (PSA) and escrow agent confirmation.
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Discussion & Community Questions
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