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-   -   If you purchase rent in advance, what journals and ledgers are effected? (https://www.askmehelpdesk.com/showthread.php?t=585804)

  • Jul 5, 2011, 06:02 PM
    future_cpa
    If you purchase rent in advance, what journals and ledgers are effected?
    On June 1st I Issued Check No. 583 for $9,100 to pay Amy Wong Real Estate for two month's worth of rent in advance.
  • Jul 6, 2011, 11:53 PM
    dom.b.fortin
    Whose books are you talking about? And is this an operating or finance lease?
    Well for simplicity, let's assume an operating lease.
    Your books:
    Upon Payment
    Dr. Prepaid rent (an asset account) $9,100
    Cr. Cash $9,100
    After one month
    Dr. Rent Expense $9,100
    Cr. Prepaid Rent $9,100
    Amy Wong's books:
    Upon Payment
    Dr. Cash $9,100
    Cr. Deferred rent revenue (a liability account) $9,100
    After one month
    Dr. Deferred rent revenue $9,100
    Cr. Rent Revenue $9,100


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