Rent received in advance, also known as unearned rent, is a liability for a company. It represents the amount of rent received before it has been earned. To record rent received in advance, follow these steps:
Key Facts
- Create a journal entry: Start by creating a journal entry to record the transaction. This will involve debiting the appropriate account and crediting the rent received in advance account.
- Debit the Rent Received in Advance account: Debit the Rent Received in Advance account to increase the liability. This account represents the amount of rent received in advance that has not yet been earned.
- Credit the Rent Revenue account: Credit the Rent Revenue account to record the increase in income. This account represents the amount of rent that has been earned.
- Enter the amounts: Enter the amounts for the rent received in advance and the rent revenue in the respective debit and credit columns of the journal entry.
- Post the journal entry: Post the journal entry to the general ledger to update the accounts.
Here is an example of a journal entry for rent received in advance:
Rent Received in Advance A/c | Debit
Rent Revenue A/c | Credit
Journal Entry
Create a journal entry to record the transaction. Debit the Rent Received in Advance account and credit the Rent Revenue account.
Debit Rent Received in Advance Account
Debit the Rent Received in Advance account to increase the liability. This account represents the amount of rent received in advance that has not yet been earned.
Credit Rent Revenue Account
Credit the Rent Revenue account to record the increase in income. This account represents the amount of rent that has been earned.
Enter Amounts
Enter the amounts for the rent received in advance and the rent revenue in the respective debit and credit columns of the journal entry.
Post Journal Entry
Post the journal entry to the general ledger to update the accounts.
Example
Here is an example of a journal entry for rent received in advance:
Rent Received in Advance A/c | Debit
Rent Revenue A/c | Credit
Sources
- https://byjusexamprep.com/defence/adjustment-entry-for-rent-received-in-advance-would-be
- https://www.accountingcapital.com/journal-entries/accounting-and-journal-entry-for-rent-received/
- https://www.thevistaacademy.com/journal-entry-of-rent-received-in-advance-and-accrued-rent/
FAQs
What is rent received in advance?
Rent received in advance is a liability for a company. It represents the amount of rent received before it has been earned.
How do I record rent received in advance?
Create a journal entry to debit the Rent Received in Advance account and credit the Rent Revenue account.
Which account do I debit for rent received in advance?
Debit the Rent Received in Advance account.
Which account do I credit for rent received in advance?
Credit the Rent Revenue account.
What is an example of a journal entry for rent received in advance?
Copy
Rent Received in Advance A/c | Debit
Rent Revenue A/c | Credit
How do I post a journal entry for rent received in advance?
Post the journal entry to the general ledger to update the accounts.
What is the difference between rent received in advance and prepaid rent?
Rent received in advance is a liability for the company that received the rent, while prepaid rent is an asset for the company that paid the rent.
How do I adjust rent received in advance at the end of the accounting period?
Debit the Rent Received in Advance account and credit the Rent Revenue account for the amount of rent that has been earned during the period.