If I have two companies abc and xyz if abc pay rent for xyz then what if the treatment in the accounting books of both companies. what are the journal entries in the books of both companies
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Journal entries of rent paid
Replies (10)
Quick Summary
in the books of ABC
RENT A/C..........Dr.
To BANK A/C
in the books of XYZ
BANK A/C........Dr.
To Rent A/C
RENT A/C..........Dr.
To BANK A/C
in the books of XYZ
BANK A/C........Dr.
To Rent A/C
Follow the accrual basis.
1)In the books of the tenant.
a)Rent A/dr
To lessee company
(When the rent is accrued)
b)Lessee company ac dr
To Bank/cash
(Being rent paid)
2)In the books of the landlord
a)Tenant a/c dr
To rent
(When the rent accrues)
b)Bank/Cash A/c dr
To tenant's A/c
(Being rent received)
1)In the books of the tenant.
a)Rent A/dr
To lessee company
(When the rent is accrued)
b)Lessee company ac dr
To Bank/cash
(Being rent paid)
2)In the books of the landlord
a)Tenant a/c dr
To rent
(When the rent accrues)
b)Bank/Cash A/c dr
To tenant's A/c
(Being rent received)
I think what Ankit has asked is that what to account for when Company 1 pays rent on behalf of Company 2, and the rent paid is to some third party.
In that case:
Company 1 will record-
Company 2 A/c ...........Dr.
To Bank A/c
(Being payment made on behalf of Company 2)
Company 2 will record:
Rent A/c..........Dr.
To Third Party A/c (Landlord)
(being rent due for the month)
Third Party A/c (Landlord).........Dr.
To Company 1 A/c
(On rent paidby Company 1, thus company 1 becomes the creditor for company 2.
Company 1 A/c......Dr.
To Bank A/c
(Being payment made/reimbursed to Company 1)
Yes. Baljeet is right. I didn't notice that. You can take his answer and ignore my answer.
I means abc co. pay rent on behalf of xyz
Thanks Baljeet sir
In the books of abc
XYZ dr.
To Bank/cash
( rent paid for xyz company)
In the books of xyz
Rent to landlord DR.
To ABC
( rent paid by abc company for month..)
In the Books of ABC
XYZ A/c.........Dr
To Bank A/c
(paid on behalf of XYZ)
In the Books of XYZ:
Rent A/c ....Dr
To ABC a/c
(Rent expense paid by ABC on our behalf)
ABC a/c ......Dr
To Bank a/c
(Paid to ABC)
The initial journal entry for prepaid rent is a debit to prepaid rent and a credit to cash. These are both asset accounts and do not increase or decrease a company's balance sheet.
The initial journal entry for prepaid rent is a debit to prepaid rent and a credit to cash. These are both asset accounts and do not increase or decrease a company's balance sheet.
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