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BizIPEsq.
BizIPEsq., Attorney
Category: Business Law
Satisfied Customers: 996
Experience:  I am a business attorney. I represent individuals and companies with all business related matters.
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Regarding the owners personal finances: : The owner rents one

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Regarding the owners personal finances: : The owner rents one of his homes out for 10k/mth. In the past invoices have been created for the monthly rent booking the income as A/R other times it's been booked as a journal entry against other income. Question: What is the correct way to post the transactions, or does it really matter?

BizIPEsq. :

Thanks for requesting me.

BizIPEsq. :

Can you elaborate on what you mean by "booked as a journal entry against other income"? What was other income?

Customer:

It's listed in the chart of accounts as " Rent received" and the account type is "other income".

Customer:

So, I have two "rent received" accounts one with the account type "accounts receivable" and the other account type " other income". Both are income accounts, so I'm not sure that it matters. I just want to be sure of the correct way to post the transactions. Right now I have transactions in both.

BizIPEsq. :

If this is done to straighten the bookkeeping part then it does not matter as long as you can figure out that both are rental income. From the perspective of taxes, it would depend on the various deduction per property and may need to appear in its own separate column. The CPA would determine that but you should be able to note that this is real estate rental income and be able to attribute it to a certain property

Customer:

okay, this is to straighten out the books. I couldn't figure out if 2 accounts were created for a specific reason, or whether it was an error. Thanks!

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