Dear reader, are you looking to know how to pass a journal entry for outstanding rent? Then you came to the right article. In this article. You will get to know about how to pass the journal entry for outstanding rent. This article is written after referring 7 blogs on this topic.
Before passing the journal entry, you should know a few things: Rent is an expense to the Organization/Business. Outstanding rent is nothing but expenses which are related to the same accounting period but paid in the future.
JOURNAL ENTRY FOR OUTSTANDING RENT IS
Rent Account Debit
Outstanding Expense Account Credit.
In simple words, outstanding rent means unpaid rent. It means rent is not paid on time; it becomes outstanding. Rent Outstanding is shown on the liability side of the Balance Sheet Because outstanding expenses are liabilities.
OUTSTANDING RENT JOURNAL ENTRY EXAMPLE
Rent needs to be paid to Mr.ABC owner of the building for rupees 25,000 but till date it’s not paid.
We need to pass the following General Journal entry for this transaction.
Rent account debit for 25,000.
Outstanding Rent account credit for 25,000.
(Being rent not paid on due date to Mr.ABC)
In this case, rent is an expense. So, it’s a nominal account. We should follow nominal account rule. Outstanding rent is a liability.
OUTSTANDING RENT PAID JOURNAL ENTRY EXAMPLE
In outstanding expense account It’s showing 25,000 credit balance. This amount related to rent payable to Mr. ABC Now organisation/business is decided to pay rupees 25,000 to Mr.ABC We need to pass the following journal entry.
Outstanding Rent account Debit for Rs 25000/-
Cash or bank account Credit Rs 25000/-
(Being outstanding expense paid to Mr.ABC)
Dear reader in this article you get to know about Journal Entry for Rent Outstanding. Hope you understood the things better. If you have any query regarding this article kindly comment below.