Tenant pays in advance

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WCInvestments
WCInvestments Member ✭
in Business and Rental Property Tools (Windows)
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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  • UKR
    UKR SuperUser ✭✭✭✭✭
    Answer ✓
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    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.

Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited April 2021
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    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
    UKR SuperUser ✭✭✭✭✭
    Answer ✓
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    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.
  • WCInvestments
    WCInvestments Member ✭
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    @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
    jujujuju Member ✭✭✭
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    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.
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