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I am looking to record office rent expense, which I pay on the first of the month in which the rent is used for. I'm using the accrual method and wondering how to record

I'm wondering if these are the right steps:

1. Create journal entry when I pay bill: Debit Prepaid Rent Expense by amount of rent and credit Equity Investment Payable by same amount (FYI - this is an LLC).

2. At the end of the month, I then will debit Rent Expense and Credit Prepaid Rent

If this is correct, do I also have to create a bill in the Quickbooks "Enter Bills" section?

Thanks in advance for the help!

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Best answer 12-10-2018

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Established Community Backer *

You are technically correct, but I am not sure why your a...

You are technically correct, but I am not sure why your are crediting equity investment payable.  This should be the cash from your operating account. 

You are better off entering a bill for the rent and memorizing the bill to recur each month.  Since you will always have one month's rent prepaid if you pay it ahead of the due date, there is no reason to enter the prepaid and reverse it each month as it will always be the same unless the rent changes.

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Accrual Method means you use ONLY Enter Bills from HOME s...

Accrual Method means you use ONLY Enter Bills from HOME screen Vendors Section.  Also, "prepaid rent expense" is a current asset account.
 "end of month i then will debit"  Rent ( expense account ) is due in advance per 99.99% of lease agreements.  So is recorded in Enter Bills from Vendor Section in QB
Rent  Is not deductible if for personal use.
Also, Never, Never use Journal Entry section in QB is reserved for adjustments by your CPA only.
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Thanks Ray.  So if I pay the rent expense (this is for my...

Thanks Ray.  So if I pay the rent expense (this is for my office rent, so not personal use) by entering it as a bill, when I need to pay the bill, what account do I pay it out of?  I actually have paid these expenses out of my own personal money as the business does not have enough revenue to support.  Since it is an LLC I have set up an Equity Investment Payable account which will get credited, but not sure how to do this on the Pay Bills section.  Thanks!
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First on rent to be paid.  HOME screen Vendor Section fol...

First on rent to be paid.  HOME screen Vendor Section follow the lines left to right Enter Bills ----- Fill in all data on that screen ---- then when you want to pay go to Pay Bills screen              ii's a high class check register screen to write print a check.  If you don't have blank checks to be printed on checks and you hand write out one just fill in all the prompts on this screen and i still print out a dummy paper check and staple to the paid bill for filing info.
Now you had to pay expense personally for the business then yes would use something like your Equity Investment Payable account to keep track of various costs to the business  So how to do without using JE section????  From LIST - CHART OF ACCOUNTS find the account then click to open this account and if will look like an old fashion register but no debits or credits has decrease or increase columns (don't ask it's a QB way) Enter in date, pick a #, payee Vendor you,  Account ---Rent - Office Supplies - Purchases - what ever expense you paid personally not with business funds,  line at a time.   Then review what your doing with your CPA they may suggest to use another account for tax/financial purposes.
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Thanks this is very helpful.  I'm still just a bit confus...

Thanks this is very helpful.  I'm still just a bit confused when I get to the Pay Bills screen.  My Equity Investment Payable account doesn't show up on the Payment section, so which account should I select or do I need to set up the "Credits" section"?
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TWO separate items  RENT and other expenses for the busin...

TWO separate items
 RENT and other expenses for the business to be paid by the business with business funds from the business checking account were you deposit income through HOME CUSTOMER SECTION (see lines left to right)  

 Example you receive bill from ABC Landlord dated 04/15/2015 for $500.00 due 1st of month ( and all other bill for the business, You go to Enter  Bills fill in data
1. Accounts payable account
 2. Vendor ABC Landlord plus address etc. ref no.  MAY2015
 3. terms due on receipt
4.in expense tab account RENT EXPENSE
 5. 500.00  
6. memo may 2015 rent for business
SAVE and close         or new to enter more bills
Next week PAY BILL " accounts payable"  "dot" in show all bills ------  select ABC Landlord 500.00 date, bank account etc. etc. save and print check.

NEXT What you paid out of your personal check book not business is were you click the Equity Investment Payable account you set up before
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Hi there, I have a quick question about this. If rent is...

Hi there, I have a quick question about this. If rent is paid upfront annually, that significant expense affects the P/L's for that month. Is there a way that you can record a single outgoing but then attribute that expense across multiple months in the reporting section?
Established Community Backer *

You are technically correct, but I am not sure why your a...

You are technically correct, but I am not sure why your are crediting equity investment payable.  This should be the cash from your operating account. 

You are better off entering a bill for the rent and memorizing the bill to recur each month.  Since you will always have one month's rent prepaid if you pay it ahead of the due date, there is no reason to enter the prepaid and reverse it each month as it will always be the same unless the rent changes.

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at19 states ---  pay some business expense out of his per...

at19 states ---  pay some business expense out of his personal account cause has no funds in business ( LLC ) So has to be loan from Officer or what he calls equity investment payable.  If pure Sole Prop i would have no problem using cash (his personal cash is same as business)
Established Community Backer ***

"which I pay on the first of the month in which the rent...

"which I pay on the first of the month in which the rent is used for."

If this is all in the same month, why even treat it as prepaid? You paid rent for That month, in That month. Really, there is no need to track this as prepayment. Prepayment would be, I pay a year in advance.

Established Community Backer ***

"If rent is paid upfront annually, that significant expen...

"If rent is paid upfront annually, that significant expense affects the P/L's for that month."

If you are a Cash Basis tax filer, that is correctly All Expense as of the date you paid it.

"Is there a way that you can record a single outgoing but then attribute that expense across multiple months in the reporting section?"

Not for Cash Basis. For an Accrual Basis entity, you would track this as Prepaid = Other Asset, and reduce that as each Rent would be Due.


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