INCOME

by CLAUDIA FLEMING
(CAMERON PARK, CA, USA)

HOW DO I RECORD PREPAID INCOME? FOR EXAMPLE, 1ST AND LAST MONTH'S RENT PAID IN JANUARY (RECORDED IN JAN) AND TENANT LEAVES IN JUNE, LAST MONTH, WITH JUNE ALREADY PAID FOR IN JANUARY

Hello Claudia,

Thank you for contributing with your question.

Prepaid income is recorded as a current liability on the balance sheet. Using the above example with one month's rent equal to $1,000.00, your entries would be as follows:

1st and Last Months rent received in January is recorded in January as:

Debit $2,000 to the Bank account (asset)
Credit $1,000 to Rent Income account (revenue)
Credit $1,000 to Prepaid Income account (liability)

The tenant leaving in June is recorded in June as:

Debit $1,000 to Prepaid Income account (liability)
Credit $1,000 to Rent Income account (revenue)

Thanks again for your question!

Revenue

Service revenue in conjunction with the sale of merchandise is an example of what?

Is this a multiple choice? :)

I'm not so sure that I'm understanding the question, but am thinking the answer is possibly a Commission(?)

Does anyone else agree or have a different answer?