Expert: Mike Wellman - 10/12/2007

Question
I am trying to get this debit credit and journal methods down for better record keeping. I only have a few basic questions. I am only keeping the most basic journals for my needs. Now if I sell something on account do I debit a/r and credit sales? Also when receiving rent, since I have no unearned rent account, should I debit rent income and credit a/r ? I appreciate any help, thanks.

Marc

Answer
A sale on account triggers two entries.

A/R  XXX.XX
 Sales     XXX.XX

and

Cost of sales XX.XX
 Inventory         XX.XX

Rent income is a debit to Cash and credit to Rent Income. If the rent has been earned but no paid you debit Rent receivable. Generally, cash basis taxpayers do not record rent income until it is actually received.