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Tenant pays in advance

WCInvestments

I have a tenant who pays several months in advance with a single payment. How do I apply the single payment to the correct months?

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Accepted answers

UKR

AFAIK, Quicken RPM likes rent to come in like clockwork, every month on the Due Date. No other intervals.

You could, similar to what @Tom Young suggested, receive the total payment into your checking account and categorize it as a transfer to a "Advance Rent Received" asset account.
Change the Tenant record to point the Account Name to the "Advance ..." account.

Then, every month you record rent received as a payment from the "Advance ..." account until the money runs out.

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Tom Young

From a "pure accounting" standpoint the appropriate entry would be along the lines of

Debit (increase) Checking Account            $6,000      (Deposit 6 months of rent)
Credit (increase) Rental Income Category             $1,000      (Recognize "this month's" rental income)
Credit (increase) Deferred Rent Liability Account $5,000      (Defer 5 month's of rental income)

Then each of the following five months you'd make the following entry

Debit (decrease) Deferred Rent Liability Account $1,000
Credit (increase) Rental Income Category $1,000

Since I don't use the Home & Business product (which I assume is the product you're using) I can't really help with the "mechanics" of making these accounting entries. The programming might insist upon having the "cash" - the $1,000 a month that you'd be taking from the Deferred Rent Liability Account - come from an Account that's designated in Quicken as a "Cash", "Checking" or "Savings" Account. If that's the case then you'd have to set up one of these Account, a manual, non-connected Account, to make this accounting work.

UKR

AFAIK, Quicken RPM likes rent to come in like clockwork, every month on the Due Date. No other intervals.

Then, every month you record rent received as a payment from the "Advance ..." account until the money runs out.

WCInvestments

@UKR I implemented your suggestion to set up an asset account - Advanced Rent Received and transfer rent checks from my checking to Advanced Rent Received. Worked perfectly. Thank you.

jujujuju

I don't use Q RPM, but handle rentals in Q H&B.

I concur with using an Advance Rent Received account.

However, I would not wait for each month to apply it to the rent invoices. I would enter as Advance Rent Received, then immediately apply to the first month rent. Then I would immediately thereafter apply to the second month rent, and so on.

Surely Q RPM should allow this. This would provide a more accurate accounting and make the job easier for the landlord, as it all gets done at one time.

Also, advance rent is taxable income when received for a cash basis taxpayer, and if the advance rent spans year end, not applying it would give inaccurate tax reports.