Rent Expense Journal Entry

Rent is an Indirect Expense which is recorded in the Income Statement as an Operating Expenses.

When rent is paid to rental company during the month against the use of Property, Land, Building, Motor Vehicle, etc, then it is called Rent Expense and following Journal Entry is passed by the tenant in the Journal of business as shown below:

                         Rent Expense Account   XXX

                                                               Cash Account  XXX

(Rent Paid For the Period)

Usually, at the start of a tenant agreement, the landlord or owner of the property demands from tenant advance rent for a security purpose, then this advance payment of rent is called Rent Paid In Advance Or Prepaid Rent based on Accrual Basis of Accounting.

When rent expense is incurred by the company, we debit it and when it is closed to Income Statement, then we credit it at the end of the accounting period.