How do I account for Customers' deposits in my books as a stockbroking firm

Question

As a stockbroking firm, we receive deposits from clients to trade on their behalves upon receipt of customers' instruction to do so. That is, we buy and sell shares and other securities on behalf of our clients.

Income is only derived by the stockbroking firm based on commissions on sales and purchase of shares and accounts maintenance charges.

How will monies received in advance i.e. clients deposits for trading activities be treated in my books as the stockbroking firm.?

Answer 1

It should be a current liability in your books until you invest. When you get the money:

Dr - Your bank account
Cr - Customer payable account

When you make the investment on your customer behalf:

Cr- Your bank account
Dr - Customer payable account