and now we will learn our first landlord-tenant transaction receiving rent payments what happens
when we receive rent well the cash in our bank account goes up because we just received rent
and of course the account called unearned rent which is the account that represents the total
money that the landlord really owes back to the tenants until the tenants stay in the apartment
or office that will increase the amount that we did not earn will increase when we receive
money in advance of course the individual tenants balance will reflect the amount that the landlord
owes the tenant for future staying on in the apartment or office please note we will not
use the undeposited funds feature in QuickBooks we will assume that all tenants payments are directly
deposited into the bank account checks received are immediately deposited into the bank account
please watch the QuickBooks banking videos that I made for you if you need to understand more
about undeposited funds and when the bank account actually increases if you know QuickBooks you can
use the undeposited funds feature in your own company but for this video we will assume the
money either goes directly into the bank account from the tenant or the tenant gives us a check
and we always deposit it on the same day for example let's imagine on January 1 we received
$6,000 from Dave in apartment 3a for six months rent in advance and he gave us cheque number 84
and we ran to the bank and deposited Dave check obviously this is $1,000 per month but for now
let's just record what we have not yet earned from the icon bar click payment the date that
we are imagining Dave paid us is January 1 of 2017 the customer or the tenant that paid us was Dave
in 3a he gave us cheque number 84 and you have to make sure that you're putting it into the correct
bank account not undeposited funds and not paypal we put it into Chase Bank now the money amount
that he paid us $6,000 to save just the field on the left of your keyboard push the tab key
and now we have the payment recorded on January 1 with all the appropriate information at the very
bottom of the window click Save and close and at the minute you save the payment QuickBooks
asks you if you should print a credit memo the answer is yes click print predator print credit
memo now in a real situation you would click print and give Dave the credit memo however
for this video I will instead click preview and this is what the rent receipt would look like we
know it's a credit but it'll say rent receipt and at the very bottom it says balance credit
which means that we owe excuse me the landlord owes the tenant the six thousand dollars that
the tenant paid until the tenant actually stays in the apartment during that time so what is now
the result of that transaction well if we look at the trial balance we see that Chase Bank has shown
up for the first time as six thousand dollars an unearned rental income has also shown up in the
trial balance for the first time as $6000 you can also see the details in the tenants report
the tenants balance detail shows specifically Dave in 3a made a payment on January 1 into
the unearned rent account unearned rent income and we owed Dave six thousand dollars worth of
rent until time goes by and Dave stays to use up what he paid so what is now the result of that
transaction well if we look at the trial balance we see that Chase Bank has shown up for the first
time as six thousand dollars an unearned rental income has also shown up in the trial balance for
the first time as six thousand dollars you can also see the details in the tenants report the
tenants balance detail shows specifically Dave in 3a made a payment on January 1 into the unearned
rent account unearned rent income and we owed Dave six thousand dollars worth of rent until time goes
by and Dave stays to use up what he paid let's do the second one now let's do the second one let's
imagine on January 1 we received 7200 from Donna an apartment 4b for six months rent in advance and
this is the check number of the check she gave us immediately deposited and that means that Donna's
monthly rent is 1,200 per month so from the top left we click payment we make sure we have the
correct date check number and going into the right bank account it was checked number seven
one seven seven one seven the amount she paid us was seven thousand two hundred dollars and
basically that's it all we have to make sure you choose the right tenant in this case so Donna On
January 1 gave a 7200 with check number 7 1 7 that was deposited into Chase Bank now when we
click Save and close remember you have to print the credit memo but in our video we will only
preview it so that you see what it looks like it says rent receipt and it also says a credit
balance on the bottom for the amount the customer paid but the interesting results are here in the
trial balance notice unearned rental income is thirteen thousand two hundred and if anyone asks
why is unearned rental income thirteen thousand two hundred you can tell them that if they look
at the tenants balance detail they can see that Dave the tenant gave six thousand that
we have not yet earned Donna the tenant gave seven thousand two hundred that we have not yet earned
so the total money that is unearned from from tenants is thirteen thousand two hundred as of
January 1 and that thirteen thousand two hundred is the same thirteen thousand two hundred in the
general ledger chart of accounts trial balance unearned rental income 13200 now let's imagine
our third tenant johnny is a bit of a deadbeat and on january 1 he paid nothing but his monthly
rent is seven hundred dollars per month and if we spoke to Johnny and Johnny promised he would have
the rent within the week we should put that in the notes in the tenants records so from the icon bar
we can click tenants records which is really the customer center click on Johnny the tenant
and then click on notes now we're going to go to manage notes add a new note date and time stamp
the note and hit enter and say Johnny promise to pay by January 7th and whatever other information
you feel is necessary to remember about Johnny when you click OK the note stays there and all
you have to do is open the tenant Center click on Johnny and you will see the substance of the note