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Thread: Question about unearned rent

  1. 08-10-2008 05:01 PM #1
    flexdeck
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    Question Question about unearned rent

    If a company receives a 6-months prepaid rent for the building space. What would be the best way to account for it? This what my understanding is....

    Cash (dr)
    Unearned rent (cr)

    Then to turn unearned rent into revenue:

    Unearned rent (dr)
    Office rent (cr)

    Am i doing something wrong?
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  2. 08-10-2008 05:05 PM #2
    ZahiD
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    Yes and No. Office rent sounds more like an expense account.... you should use income account.... something like Rental income....

    Your first entry is right, second entry should be something like this:

    Unearened rent (dr)
    Rental Income (cr)
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  3. 08-10-2008 05:12 PM #3
    flexdeck
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    Thanks zaddy for the quick response...
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  4. 08-18-2008 12:35 PM #4
    Mike@boiron
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    unearned rent is not really a term widely used, the typical account name is deferred revenue. just like a prepaid account you would recognize the revenue over the 6 months it is being earned
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  5. 03-09-2009 10:02 PM #5
    accountingjobs
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    It seems you booking it correctly.. Would use an "income" account instead, like someone mentioned it above..
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