Amrit and Bimal are partners sharing profits equally. Bimal has given his property on rent to the firm on 1st April,2021 at a monthly rent of Rs.5000. The firm paid him rent from April,2021 to Feburary,2022 by issuing a cheque on 1st March,2022. Rent for the month of March was still payable. Pass the journal entries for the above transaction?

Question

Answer

Journal Entries for Rent Paid to Partner

The given scenario involves the payment of rent by a partnership firm to one of its partners who has given his property on rent to the firm. The journal entries for this transaction can be recorded as follows:

1. Recording Rent Expense

Rent paid by the firm is a business expense and needs to be recorded in the books of accounts. The journal entry for rent expense is as follows:

Rent Expense A/C Dr. 50,000
To Bank A/C 50,000

Explanation:
• Rent Expense A/C is debited with Rs.50,000 as it represents an increase in expenses.
• Bank A/C is credited with Rs.50,000 as it represents a decrease in assets.

2. Recording Rent Payable

As the rent for the month of March is still payable, it needs to be recorded as a liability in the books of accounts. The journal entry for rent payable is as follows:

Rent Payable A/C Dr. 5,000
To Rent Expense A/C 5,000

Explanation:
• Rent Payable A/C is debited with Rs.5,000 as it represents an increase in liabilities.
• Rent Expense A/C is credited with Rs.5,000 as it represents a decrease in expenses.

3. Recording Rent Received by Partner

The partner who has given his property on rent needs to receive rent from the firm. The journal entry for rent received by the partner is as follows:

Bank A/C Dr. 45,000
To Rent Received A/C 45,000

Explanation:
• Bank A/C is debited with Rs.45,000 as it represents a decrease in assets.
• Rent Received A/C is credited with Rs.45,000 as it represents an increase in income.

Conclusion

In conclusion, the above journal entries are recorded to account for the payment of rent by a partnership firm to one of its partners who has given his property on rent to the firm. The rent expense is recorded, and the rent payable is accounted for as a liability. The partner receives the rent amount, which is recorded as income.

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