[GNC] accounts receivable for rent..

[Adrien Monteleone]

On 3/5/22 10:32 AM, Michael or Penny Novack wrote:
> 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".

Certainly. But the OP needs practical help. I gave them a resource for 
the conceptual help as well.

> 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.
Precisely because their payment and rental due activity is *not* at the 
same time, more than likely, a cash basis will be an absolute "mess" to 
maintain compared to using the Business Features. (as you proceed to 
describe below) And that method you describe requires unnecessarily 
employing 'ghost' accounts just for tracking purposes to duplicate the 
functionality *already built in*.

The OP is brand new to accounting, and you're offering the path of 
greatest resistance. I think you got lost from the 'concept' point forward.

But if the OP wants to traverse that road, of course, that's their call.

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


Regards,
Adrien