[GNC] accounts receivable for rent..

[Michael or Penny Novack]

On 3/5/2022 4:03 AM, Adrien Monteleone wrote:
> On 3/5/22 12:50 AM, arthur brogard via gnucash-user wrote:
> We have only one property.  Only one tenant.  Simplest possible case I 
> guess.
>> I'm thinking I must:
>> . Create an 'accounts receivable'  account.That would be an income 
>> account I guess.  'Other income' ?
>
> Accounts Receivable is an Asset account.
>
> As David noted, if you go through the setup wizard and choose 
> 'Business Accounts' you'll get it created automatically for you. 

Wait a moment folks. "Accounts Receivable" is an accounting CONCEPT. You 
can have such an account even if NOT keeping books on the accrual basis 
(required for using the built in gnucash "business features".

We are being asked "what should I do" by a person who has only one 
rental property, one tenant, etc. And who might want to have books on 
the cash basis rather than accrual. We have been told that rental 
PAYMENTS are often/usually not the "right amount" and that the tenant 
might be in arrears of ahead. In other words, not going to be enough to 
simply enter transactions when something is paid debiting cash and 
crediting rental income. There is more to track:

Can have an asset account "rent owed" (that's  the equivalent A/R)  and 
an income account "rent not received" (that would NOT be included in the 
P&L report). The transaction between these two could be scheduled as 
automatic.

But then when the tenant DOES make a payment, the transaction is much 
more complicated. It has to BOTH debit cash and credit "rent owed" AND 
transfer that same amount between rent not received and rent income. Yes 
more work because you are tracking two different things.

Two way split transactions can be hard to enter (especially for a 
beginner) but this is a special case where there is a trick that can be 
used. Essentially going to first enter a one sided split and then 
"correct" it.

When the tenant makes a payment begin a transaction debiting cash for 
TWICE the amount and hit "split" entering "journal mode". Change the 
Imbalance amount (it will be a credit) to the correct amount (HALF) and 
specify the account as "rent owed" and then for the new Imbalance 
"rental income". But do NOT finish the transaction yet. Go up to the 
line where the account is cash and change to the correct amount (Half) 
and now the Imbalance will be debit. Specify that account to be "rent 
not received". See, in addition to recording the receipt of rental 
income also recorded the reduction of what the tenant owes. A printout 
of the account "rent owed" can be showed to the tenant << it will have 
all the "rent due" transactions, all the "rent payment"  transactions, 
and the balance owed.

Of course if not up to "splits" can simply enter two simple 
transactions. But like I said, this is a special case. The general case 
of two way split doesn't have the same number of debit and credit 
accounts and the amounts can all be different as long as total credits 
equals total debits.  Unless you have first computed that that total 
amount (outside of gnucash) you don't know with what amount to start. 
Here there are the same number of debits and credits, two of each, all 
for the same amount, so the right amount to start with is TWICE that 
amount.

Michael D Novack