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

    Jul 5, 2011, 06:02 PM
    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.
    dom.b.fortin's Avatar
    dom.b.fortin Posts: 27, Reputation: 1
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    #2

    Jul 6, 2011, 11:53 PM
    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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