Transferring a security deposit on accrual accounting is different, you can see the other article Transferring Security Deposits between tenants (Accrual Accounting)
The same steps from that article will not work on cash accounting. This is because credit notes do not have postings in cash accounting since no cash is exchanged. This is the accounting impact:
Tenant 1
- Security deposit application
- DR security deposits
- CR prepaid income
- Invoice applied to security deposit application
- nothing
Tenant 2
- Invoice for security deposits
- nothing
- Credit note
- nothing
Currently, the only way to increase a tenant's security deposit balance in cash accounting is creating an invoice payment. Cash must be exchanged in order for journal entries to be recorded in cash accounting, and no cash is exchanged for the second tenant in this case.
In order to do this on cash accounting, you can refund the first tenant's security deposit payment, and then enter in a new payment for the second tenant on the same date. This will add extra transactions to the bank account, but the amounts should still zero out.