In this process, you are basically paying out the Prepayment (Deposit) from the existing account to create a Prepayment (Deposit) onto another account.
In Summary:
1) add the Water account to Cash Drawer that currently has the Deposit
2) use the Prepayment (Deposit) as your tender type. The system will think you are creating a prepayment/overpayment
3) assign the Prepayment to the new Water account
4) process the payment
Below is a 1 min video on the process. You'll see me change the Due Date in Cash Drawer because I had to trick the system into thinking there wasn't a balance on the account. The system will not let you create a Prepayment if there is a Balance on the account (unless you trick it!)