How to account for rent cheque?

Dean Gibson gnucash.stuff at ultimeth.com
Tue Mar 3 19:06:40 EST 2015


On 2015-03-03 15:24, geo909 wrote:
> Thank you so much Edward, Dean, foxylady, and the two Michaels.. Your
> responses were an enormous help.
> Sorry for the late reply; there were a lot of things to digest from your
> answers and I did some reading too. But I think I understand well how
> accruAl accounting works now, at least on a basic level.
>
> So, given that I go with the accruAl method, can you please confirm that I
> get the following example right?
>
> Let's say that, as before, every first of the month I leave a cheque of 1000
> to my landlord. But now, I also have a roommate with whom I split the rent
> in half. So, I do the following:
>
> On the first of each month:
> . Expenses:Rent - debit of 1000
> . Liability:Rent - credit of 500
> . Asset:roommate owes me - debit of 500
>
> When the cheque is cashed:
> . Assets:Chequing account - credit of 500
> . Liability: Rent - debit of 500
>
> When my roommate pays me for half the rent that I payed on his behalf:
> . Asset:roommate owes me - credit of 500
> . Asset:Chequing account - debit of 500
>
> Does this look correct?
>
> Thanks


Well, the first one won't balance.  I'd write it as:

Expense (rent expense): $500 (debit) -- your portion
Liability (rent payable): $1000 (credit)
Asset (receivable): $500 (debit)

The second one should be:

Asset (checking): $1000 (credit) -- you pay the whole thing, correct?
Liability (rent):  $1000 (debit) -- zeroes this balance -- you don't owe 
any more (until next month).

The third one looks ok.

Some will say that all this is a bit pedantic (and it is somewhat), but 
it will help get your head around the process.


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