and now we're ready for our first landlord transaction receiving rent from tenants if
you have any questions about this topic you can leave them in the comment section below and I'll
do my best to help you and of course if you feel the video helped you I hope you will click like
and don't forget to subscribe to get updates on new videos that come out all the time when we
receive rent payments we usually receive them in advance of when the tenant stays for a particular
period of time every transaction you ever recorded to QuickBooks always affects two separate areas of
your records first every transaction that you record changes the general ledger in the chart
of accounts and the results of those transactions will show up on our good friend the trial balance
but that very same rent payment that very same transaction also changes tenant specific records
and we check those on our good friend the report we recently put up the tenant balance detail now
what will happen on the trial balance when we receive our first rent payment as our first
transaction well we know that cash and bank will go up because we physically received money and
put it right in the bank and we also know that unearned rental income will go up because at the
moment we receive the rent we have more on earned we always receive it before we earn it or at least
almost so please note however our examples have slightly different events in slightly different
order that would be in a real situation I promise you you will experience every situation in soon
however please just follow along with our little story just for educational purposes learning it
this way will make the ideas more clear we will learn about security deposits and late paying
clients later in the course for now let's just imagine that the rent we receive or let's say
the payments we receive in this video is for future rent and not for a security deposit so
let's take a look at our first example we charge a Lin $2,000 a month for rent so on January 1 he
gave us twelve thousand dollars with a check and that's for six months rent in advance his check
was immediately deposited into the bank account and we're always going to pretend that is the case
every time we get a check from a tenant that's just the way the course goes and you could take
a look at the banking and the undeposited funds in the supplemental videos later so what will
happen in the trial balance when we record this well it's blank now but as soon as we record this
payment from the tenant cash and bank will show up for the first time as 12,000 unearned rental
income will show up for the first time as 12,000 and that's what will happen in the trial balance
but from that very same payment the balance and Allan's specific records will become 12,000 now
this is a transaction that you must get from clicking the plus sign everything here relates
to your tenants because it says customers and the window will that we will click to receive payment
from tenants is receive payment go ahead and click it and the receive payment window opens first you
have to click the pull down list to choose the tenant and in this case we want Al and RB here
he is be careful not to choose only the unit be careful to choose the specific tenant double-click
and there he is now this is just warning you that an invoice is not going with it QuickBooks doesn't
understand that we're a landlord and in our specific business the customer pays in advance
of when we earn the money from giving the service so this is a nice warning but we'll just close it
out by clicking this X over here now the day that we're imagining we physically receive this money
from Alan is January 1 of 2019 remember he gave us cheque number six one six one and we're also
pretending that the money went directly into the bank account and the amount he gave was twelve
thousand dollars so this is all the information about that specific transaction on January 1 of
2019 and when we click Save and close we can look at the results yeah it's just again warning us you
know we don't really want this - so we'll click the don't bother me box we'll just save it as
a credit because we know that this will record that the tenant is owed twelve thousand dollars
in future rent services for staying there in the future so click Save as a credit and now we can
click reports custom reports trial balance all the one we set up in an earlier video and lo and
behold the numbers and the trial balance are as exactly as we expected we now have twelve
thousand dollars in our bank account and we now have a liability of unearned rent twelve thousand
that we owe back to the tenant that we will slowly uh earn over time more specifically we can still
click reports and check the tenant balance detail to see that specifically specifically for Alan you
know it breaks it down by unit and so forth but specifically for Alan it's owed twelve thousand
now don't worry about the bold down here you can just sort that because that's totaling the you
know this is the total for Alan but then of course that's totaling the unit which is in our case the
same as the tenant because he's the first one as far as our records are concerned and of course
the total for the the Meadow Lane and so on but look specifically at the light for the customer
and you can see that this says Alan specifically is owed twelve thousand in future rent services
now doing a second example will illustrate some very important points let's imagine we charge
kandi a thousand dollars per month in rent and on january one she gave us check number seven
171 for six thousand dollars which is six months rent in advance we got two people whose parents
really want them to stay away so her check was immediately deposited into the bank and again
that's going to be the same situation for the whole course so again if you want to do it with
undeposited funds and hold on to the check for a while before you deposit you have to watch the
supplemental video is about undeposited funds so what will happen in the trial balance well before
we deposit candy six thousand dollar check these were the numbers after the most recent transaction
but after we record her check cash and bank will increase to eighteen thousand and unearned rental
income will also increase to eighteen thousand what else will happen the balance and Candy's
specific records will be six thousand dollars that we will all candy in future rent services until
she finishes staying so we again go back to the payment window we click the plus sign and again
click receive payment and of course QuickBooks remembers the date January one but this time
we're choosing candy Charles in apartment 3c okay now again it's warning us that there's no
invoice because it doesn't understand that we're a landlord and our customers pay us in advance
so let's just close this little X and payment and make sure that we choose payment method check and
it's checked number seven one seven one that we immediately deposit into the bank account that's
what we're pretending in our little story so she gave six thousand because she's also paying six
months in advance but her rent is only a thousand a month so on January 1 she pays us six thousand
in advance for six future months of staying save and close and now first of all when we look at
the tenant balance detail you can see that just only candy is owed six thousand for future rent
services just only Allen is owed twelve thousand but the total of everyone together you can see
here from Meadow Lane is eighteen thousand and that's the total unearned by everybody
and that eighteen thousand is the total unearned that's also the same when you click reports trial
balance you can see that unearned rental income increased to exactly the amount we predicted and
cash and bank reflects exactly what we deposited now because this is your first transaction I
wish to give you something that's going to help you for the rest of the course and for the rest
of your life as you use QuickBooks you can fix any mistake by opening the transaction from the
reports just double-click fix and save let me show you if you just click reports and you choose trial
balance you can see these are the accumulated totals of the accounts and again if you click
reports tenant balance detail you get a different set of records specifically each individual tenant
if I wanted to change Kandi's payment from six thousand to six million all I would have to do
is double click and the window that I originally entered this pane into would reopen and I could
change almost anything I want I could change the date the customer the number or even the
bank account that it went into but let's just make this six billion million trillion whatever
you like and we push tab okay that's a lot of money and we click Save and close now as soon
as you save a changed transaction the results and the report fix themselves immediately that means
if I click reports trial balance you can see I now have crazy numbers and that's because one of
the two transactions is wrong now here's the best part even though the trial balance is a summary
any number on a summary report that is the sum of a whole bunch of other numbers you can double
click directly on that sum and another window opens up showing you all the numbers that led
up to that so again let me just go back to where I was a moment ago in the trial balance if I want
to know why is this the balance of unearned rental income I can double click and I could
see every transaction that led up to the balance of unearned rental income okay but this doesn't
seem to be the problem it's this one this payment right here so again I can double click directly on
the line of the transaction and I will return to the window that I had originally recorded it in
I can change anything I want now if I wish to save only the field I can click away from the
field and that saves only the field and then when I click Save and close notice all the numbers on
all the reports immediately fix themselves the trial balance is back to normal reports
tenant balance detail also back to normal so you never have to worry if you recorded a mistake