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    TugbaBoz's Avatar
    TugbaBoz Posts: 1, Reputation: 1
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    #1

    Mar 17, 2008, 07:44 PM
    How to record a free rent in Journal Entry
    If I have a 5 year of lease and one month free rent per year, how do I record this?
    We are used to recording:
    CR: Other Account receivable
    DR: rent expense.
    It seems to me something missing?. Appreciate your help..
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Mar 20, 2008, 01:02 AM
    How did this get into Other Account Receivable to begin with? I don't see where the receivable comes in.

    Are you pre-paying the rent? If so, that should be in Prepaid Rent (or lumped in with Prepaid Expenses), not in the receivables. Receivables represents an amount of money somewhere else owes you, and no one owes you anything. If prepaid, you have a claim on the use of the property, which is not the same as someone owing you money.

    If you're not too concerned about your interim statements, if you just don't worry about that one free month, the total you are paying per year should come out as your Rent Expense. For yearly statements, it shouldn't make any difference. Your rent expense is what you are actually paying.
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