Accounting for Beginners #74 / Paying Rent Expense / Journal Entry / Widget INC #2 (2023)

Introduction BEST ACCOUNTING PLAYLIST ON YOUTUBE !!!!!!!! Accounting for Beginners #74 / Paying Rent Expense / Journal Entry / Widget INC #2. I am super excited to bring you my Widget Inc series where we go through 2 years of a business cycle by performing Journal Entries and what corresponds to those Journal Entries via the Chart of Accounts, General Ledger, Balance Sheet & Income Statement. The easiest way to keeps debits and credits, and Assets = Liabilities + Equity ( Accounting Equation) straight. This is how i passed the CPA Exam to become a licensed CPA in the State of Florida. You can use the information in the video on your first day of Accounting class all the way tho being a CPA. Debits, Credits, Assets, Draw, Expenses, Liabilities, Equity, Revenue. This video has a very basic example and can be used in the most advanced situations. Learn Debits and Credits and the basic accounting equation which is assets = liabilities + equity. This will also help with the income statement which is Revenues - Expenses. I hope you enjoy the video. In this video i go over journal entries. Get your tips here in this accounting for beginners video. There is also information on the balance sheet here in this video. I also go over Accounts Receivable, Accounts Payable, Depreciation, Accumulated Depreciation, Putting Assets on the books, Fifo and Lifo Inventory Valuation, and so much more in this series for beginners.

Accounting For Beginners #1 Debits and Credits / Assets = Liabilities + Equity

Accounting For Beginners #2 Basics / Accounting Equation

Accounting For Beginners #3 Journal Entries / Beginner Tips

Accounting For Beginners #4 Income Statement / Revenue - Expenses

Accounting For Beginners #5 The Balance Sheet / Basic Tutorial

Accounting For Beginners #6 Putting an Asset on the Balance Sheet

Accounting For Beginners #7 Depreciating an Asset / Basics

Accounting For Beginners #8 Depreciation Expense / Basics

Accounting For Beginners #9 Accounts Receivable / Basics

Accounting For Beginners #10 Accounts Payable / Basics

Accounting For Beginners #11 Fifo and Lifo Inventory / Basics

Accounting For Beginners #12 1 Journal Entry With 2 Assets / Basics

Accounting For Beginners #13 Accounting Study Guide / Template

Accounting For Beginners #14 Journal Entry with Cash / Expense

Accounting For Beginners #15 Journal Entry With Cash / Revenue

Accounting For Beginners #16 Debits & Credits / Negative Asset

Accounting For Beginners #17 T-Accounts / Debits and Credits / Accounting 101

Accounting For Beginners #18 What is a Draw? / Withdraw / Distribution / Dividend / Equity

Accounting for Beginners #19 Don't Abbreviate / Accounting 101 / Basics

Accounting For Beginners #20 Chart of Accounts / Assets, Liabilities, Equity, Revenues, Expenses

Accounting For Beginners #21 T Account Example / Accounting Tutorial

Accounting For Beginners #22 Trial Balance Unadjusted / Accounting Basics

Accounting For Beginners #23 Cash in a Bank Account / Checking Account / Basic Accounting

Accounting For Beginners #24 Does The Transaction Increase Assets / Accounting Basics

Accounting for Beginners #25 Accounts Receivable Example / Accounting 101 / Accounting Basics

Accounting For Beginners #26 Reducing Accounts Receivable / We got Paid / Accounting basics.
#Accounting #Exercise #CPA


Yoyoyo who's back once again: Who am I'm CPA strength, I'm the strongest licensed CPA in the state of Florida boys getting jacked over here.

Okay, you know what it is man.

You know you knew what it is.

Oh I love this stuff.

Man I love this yo.

What do you do see? Ph strength, besides being strong? It's like CPA instead for yo, I, educate, motivate and inspire teaching the world over accounting basic blocks, basic blocks, basic blocks.

You might know me as having the best place in the world.

This is the best place in the world.

I! Guess! If you don't know about the place, you wouldn't know about me, I, don't know just hit the playlist made and stuff best place in the world.

It has.

This is number 74 and that's what it is.

This is paying rent.

This is number two.

This is Road 100.

This is a subset of our of the big playlist accounting for beginners playlist business subset.

This is this is which again this is keeping.

This is where I'm widget Inc 73 was our first entry.

We loan it.

We loan widget Inc some money.

So now, what do you think has some money in its checking account and what is it going to do? Next, I've already made changes from the first one, like dates and stuff like that, so let's just keep going and I hope you like this boom.

What happened? Oh! This, is DC ever.

This is why this is what really why you know me this.

This has helped thousands of people.

Thousands of people by this point learn accounting get jobs like I'm on some for real stuff.

This is just you know, very subjective, I think it's the best place in the world, but this is on some real stuff.

This has really helped a thousands and thousands of people.

It helped me get a CPA license.

I know that for sure it's a mapping system that I invented.

Let's go anyways.

What happened? You paid some rent man I found this widget in Fell's great place for $4,000 I know it's a lot of money, but he said we could have it for like a year.

Maybe two years I don't know he's kind of like a family friend, you know I kind of finessed I kind of wiggled.

My way in there we're kind of finessed it up.

You know, so that's how we do and so anybody's would you dink, oh man and I hope you could sell some widgets for god sakes, but widget Inc pays rent for $4,000 out of the check.

Well, we know: do we have cash? Do we have cash checking account? Yes, we do.

We have.

We have four thousand dollars leaving because you're paying rent for our for our warehouse space, so you're paying rent.

So there's money leaving out of our checking account so check.

Your account is an asset if it's leaving our our company.

That means see if it was positive, it was going up, it'd be a debit.

That's why it's under to happen in the positive form, but it's leaving.

So it's going to be a credit.

So it's going to go down because it's going down it's leaving, so four thousand dollars is going to be our credit and our checking it and our checking account here so we're gonna.

We're going to put four thousand dollars in our checking account, which goes in an asset box, envy asset box, but it's leaving our company.

So that's why it's a credit it since leaving now what's gonna, be our exhibit pane rent? Okay, so we got money going out for a service.

That's gonna! That's gonna! Help us selvages help us make money.

So it's like an ordinary in the ordinary course of business.

That's an expense money going out in the ordinary course of business, which this is in hopes of making more money.

That's what the rent is.

That's what that's, what the money is, leaving our business for us for rent and so that accounts going up because you're getting you're, gonna you're gonna get four thousand four thousand dollars in an expense account.

You might know, because debits have to equal credits.

Well, the rents gonna be a debit but or or you could get this we're like about account, you can get you can skin a cat.

You know I, don't know why you it's gonna cap, what you can get to the problem, a multitude of different ways.

You might know hey it's an expense, because that's what that's, what uh the rent is and things friends.

So it's a debit.

So, however, you might come to it, it's gonna be that's gonna, be our debit is four thousand dollars of rent when I can put rent rent expense, we're just gonna put rent okay and that happens to go in the expense box.

Let make sure I'm recording, yes, I'm, recording I would hate to not be recording this beautiful stuff.

So that's our journal.

Entry on 228 15.

That's our journal entry we're paying we're paying rent.

We have debit, rent, $4,000 credit up, checking account $4,000 in 228.

That's our journal entry for paying right! Now, let's go to our chart up, let's go to our chart accounts in general.

Ledger! You jump cut back in what are we gonna do now? Okay, what do we have? We had checking account four thousand dollars.

Let's look at the drill, they're checking out four thousand dollars and we had ran a four thousand dollars so we're those in our chart of accounts.

The checking account was, and the rent in the chart of accounts was not so we collect the rent in the chart of accounts in the chart of accounts inside of it.

What's going on in our specified time range whatever, and our special part time range is one one, one fifteen that was the start of our business.

Let's go, let's go with rent, because that was the first thing that happened was that our journal entry, that was our debit for four thousand dollars, so we had essence it was a debit.

That means it was.

It was going up in the expense, a two 2815 we have four thousand dollars in our rent in the general ledger in our rent inside of our chart of account of rent now for the fun now, for the fun part, is our general ledger.

We just had what's what's going on in our general ledger, for our checking account, we've had two things happened in our in our checking account since we started since we started our widget in business.

Look, we had a one one fifteen.

We had ten thousand dollars now we have now we deducted.

Four thousand dollars right because we have four thousand dollars, leaving our business.

That's correct right! That's our journal journal entry indicated so we have six thousand dollars in our checking account currently a two 28:15.

We have about six thousand dollars.

So that's! What's in our debt, that's! What's in our general ledger: yo-yo jump cup, yeah yeah, alright, so we do.

We had our journal entry I'm looking down here.

We have our journal entry, debit, four thousand run, credit checking account four thousand and that turned into our chart of accounts.

We had to add rent from from from that from that happening as a change, our checking account balance to six thousand dollars and had a rent of four thousand dollars in our general Ledger's from each of those accounts.

Now, let's see what that data with that journal, entry that that made a change in the chart of accounts, there add to add grant, and then it changed the general Ledger's for the checking account it brought.

It brought the total to six thousand and it made the rent account four thousand dollars.

So what we did was we added rent to the rent affected, the income statement, the checking account affected the balance sheet and now you'll see why the net income flows over and makes things work.

So now our income statement has has the addition of rent.

We still don't have any revenue.

Income statement is revenue minus expenses, so all we have is an expense of four thousand dollars, so our net income is negative, four thousand dollars and that flows over from our income statement.

It flows over to our balance sheet.

So now we're balanced.

You have and then income of negative four thousand dollars.

We still have no retained earnings and equity, so our equity is negative.

Four thousand dollars.

What's our what's our balance sheets, you know assets, equal liabilities, plus equity.

What's our assets, the only asset we have in widgets Inc right now is $6,000 in our checking account, and this is on 228 I'm.


This is on 228 the balance sheet, we'll go over that more, but the income statements for a period, 0, 1, 0, 1 15 to 228 15, is for the period it's for a hope for the whole period.

It's gonna end up being for the whole year and the balance sheet is just on this day on this day.

Right now so 228 15 in the balance sheet, we have our asset of $6,000 and that has to equal because assets, equal liabilities plus equity.

That has two, so our liabilities and equity has to equal 6,000.

Does it well? What's what's on our liabilities alone, from Cheryl or for $10,000 that didn't change? What else is on our balance sheet? Well, we have negative $4,000 net income net income under the equity, so liabilities and equity equals 6,000, which equals 6,000 the balance sheet ooop now, oh, these are definitely gonna, be a little rusty.

I'm like making changes every single time and I I wanted to do this series earlier, but then I kept on being like oh well, making changes and it's not perfect.

It's not perfect and I had to think back to you know if you wait till everything's, perfect, you're, never going to start, and that's like one of my things like it's like a lust Brown quote like you're gonna, just jump and grow your wings on the way down.

So that's what I'm doing I like jumped off the cliff from started this series.

This is the second one on widget, Inc I, think it's 74, so we're gonna run up to a hundred on these, and you know: I'm gonna try to make everyone better, make everyone every widgets, Inc, better and better and better, and if you liked it, please like share subscribe, leave a comment like how I can make this better or maybe what you want to do in a journal.

Entry and anyways.

You just have a great great day night evening, make the most out of your day.

I'll, be nice to everyone.

Don't hate, be nice.

Alright, deuces.


What is the journal entry for payment of rent expense? ›

Rent Payments are expenses to the business. We will record the journal entry by debiting the rent expense and crediting the rent payable (Liability). Generally, the rental agreements will have a tag of security deposit. Such a security deposit is a refundable amount at the rental agreement tenure.

How do you record paid rent expense in accounting? ›

Rent Expense Under the Accrual Basis of Accounting

Under the accrual basis of accounting, if rent is paid in advance (which is frequently the case), it is initially recorded as an asset in the prepaid expenses account, and is then recognized as an expense in the period in which the business occupies the space.

Is paying rent a debit or credit? ›

Rent expense is a debit in accounting because it is an example of expense. In debit and credit rules, all expenses are said to be debit accounts because the increase in its value is journalized through a debit entry.

What is the journal entry for rent due to landlord? ›

In summary, when recording rent due to landlord and salary due to clerks in the journal, the rent expense account is debited, and the landlord payable account is credited for rent due to the landlord. On the other hand, the salary expense account is debited, and the cash account is credited for salary due to clerks.

Is paying rent an expense accounting? ›

Rent expense is an expense account representing the cost incurred by an organization for the right to use or occupy a specified asset that they do not own. For many companies, rent is a significant expense incurred to support their business.

What kind of expense is rent payment? ›

Rent expense is a type of fixed operating cost or an absorption cost for a business, as opposed to a variable expense. Rental expenses are often subject to a one- or two-year contract between the lessor and lessee, with options to renew.

Where do we record the transaction of rent paid? ›

Rent refers to periodical payments made for use of the property. Rent, in accounting, is treated as an indirect expense and will be recorded in the books as per the method of accounting followed by an organization. Rent expense is typically shown under the selling & administrative head of the income statement.

Is rent expense an asset or liability or expense? ›

In an accrual basis of accounting, if rent is paid in advance, it is considered as an asset, and once the facility is utilised, it is then considered an expense.

Is rent paid in advance an asset or expense? ›

Rent paid in advance is classified as an asset.

What account is credited when rent is paid? ›

When rent is paid to the landlord, cash which is an asset is reducing. Hence, the cash account is credited.

Why is rent expense debited? ›

Rent expense (and any other expense) will reduce a company's owner's equity (or stockholders' equity). Owner's equity which is on the right side of the accounting equation is expected to have a credit balance. Therefore, to reduce the credit balance, the expense accounts will require debit entries.

Which account is rent debited to? ›

Rent paid is an expense for the business. Expense is a nominal account. Rule of nominal account says that all the expenses and losses should be debited. hence Rent paid is to be debited to Rent A/c.

How do you write a rental ledger? ›

A rent ledger in California should include the following key information:
  1. Tenant's name and contact information.
  2. Address of rental property.
  3. Unit number (for a multifamily property)
  4. Rent amount.
  5. Dates of rent payments.
  6. Amounts paid.
  7. Signature of landlord or agent and tenant.

What is rent payable in accounting? ›

Rent Payable is a liability account in the general ledger of the tenant which reports the amount of rent owed as the date of the balance sheet.

How do you account for rent on a balance sheet? ›

Prepaid rent is recorded as an asset on the balance sheet and is initially recognized when you pay. As the period covered by the prepaid rent payment occurs, you decrease the prepaid rent asset account and increase the rent expense account.

What is the difference between lease expense and rent expense? ›

The main difference between a lease and rent agreement is the period of time they cover. A rental agreement tends to cover a short term—usually 30 days—while a lease contract is applied to long periods—usually 12 months, although 6 and 18-month contracts are also common.

How do I record a rent payment in Quickbooks? ›

How do i record rent payments received?
  1. Click+ New.
  2. Select Sales receipt.
  3. Select the customer from the Customer dropdown. ...
  4. Enter the sales info, such as the payment method.
  5. Enter line items for the products and services you sold.
  6. Hit Save and send to email the receipt.
Mar 25, 2022

What is the journal entry of rent due but not paid? ›

Rent due but not paid is to be treated as outstanding expense and is a current liability as there is an obligation to pay the same in the near future.

What are the golden rules of accounting? ›

Take a look at the three main rules of accounting: Debit the receiver and credit the giver. Debit what comes in and credit what goes out. Debit expenses and losses, credit income and gains.

Where does rent expense go on a balance sheet? ›

Rent payable is part of the "short-term debts" section of a balance sheet, also known as a statement of financial position or report on financial condition.

Would rent expense be a liability? ›

For most households, liabilities will include taxes due, bills that must be paid, rent or mortgage payments, loan interest and principal due, and so on. If you are pre-paid for performing work or a service, the work owed may also be construed as a liability.

How does paying rent affect the accounting equation? ›

How a Rent Payment Affects the Accounting Equation. A company's payment of each month's rent reduces the company's asset Cash. This is recorded with a credit to Cash. If the payment is for the current month's rent, the second account is to the temporary account Rent Expense which will be debited.

Do you increase rent expense with a debit or credit? ›

Increase rent expense with debits and the normal balance is a debit. This is the correct alternative. Expense accounts eventually decrease equity, so they have normal debit balances.

What is the straight line method for rent expense? ›

To calculate straight-line rent, aggregate the total cost of all rent payments, and divide by the total contract term. The result is the amount to be charged to expense in each month of the contract.

What is the basic rent ledger? ›

What is rent ledger? A rent ledger is a record of payments made by a tenant to a landlord. It typically includes the tenant's name, address, payment amount, and payment date. The ledger is used by landlords to keep track of payments and ensure that tenants are up to date with their rent payments.

What is a rent ledger example? ›

A rent ledger is a tool that property owners use to keep track of rent payments. It includes the names of the tenants, the amount of rent due, and the date that rent is paid. A rental property should be treated like a business, and rent ledgers are an important part of keeping good records.

What is a ledger balance for rent? ›

The rent ledger is a summary document of rent payments, broken down by rental unit and lease, and will tell you if a tenant still owes rent and if so which tenant you need to contact to resolve this.

Which entry to record payment of rent will include a debit to rent expense? ›

The correct answer is Debit to Rent Expense. If the adjusting entry had debited Prepaid Rent, it had credited also Rent Expense, which means that the expense entry method was used at the original entry related to the rent. It had debited Rent expense and credited Cash.

What account is rent payable in? ›

Rent Payable is a liability account in the general ledger of the tenant which reports the amount of rent owed as the date of the balance sheet.

What does it mean to make rent payment? ›

a fixed amount of money that you pay regularly for the use of a room, house, car, television, etc. that someone ... See more at rent. payment.

What is an example of a rental note? ›

I agree to rent a _______________________________________ unit at (room, 1 bedroom, bachelor, etc.) Rent is $___________/month. An additional deposit of $____________ is required for _____________________. (utilities, damage, etc.)

What is the accounting equation for paid rent? ›

To recap the above, the monthly rent payment keeps the sole proprietor's accounting equation, Assets = Liabilities + Owner's Equity, in balance because it reduces the company's assets and it reduces the company's owner's equity.

How do you record rent expense on a balance sheet? ›

Therefore, rent expense is a debit and not a credit. Rent expense is an expense on the company's income statement and calculated as an actual expense in the month, quarter or year that it was paid. It is recorded as a debit balance on the balance sheet.

How do you record prepaid rent and rent expense? ›

When rent is paid in advance of its due date, prepaid rent is recorded at the time of payment as a credit to cash/accounts payable and a debit to prepaid rent. When the future rent period occurs, the prepaid is relieved to rent expense with a credit to prepaid rent and a debit to rent expense.

Is rent expense an asset or liability? ›

Rent is an expense which can either be treated as a current asset or current liability. When rent is paid in advance before it is due, then it is known as prepaid rent and is considered as a current asset.

What is the difference between rent payable and rent expense? ›

Rent expense and rent payable differ from an accounting standpoint, but they interrelate in operating activities. Rent expense is incorporated into your operating expenses, while a rent payable entry reflects the money you need to send to a landlord to meet the terms of your lease.

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