Expenses & income · Level: Basics
Journal entry: Rent for business premises
Rent is an expense of the period; without VAT on the invoice there is no input VAT.
Worked example
The monthly rent for the business premises of £3,200.00 is debited from the bank account.
Correct journal entry
Rent £3,200.00 / Bank £3,200.00
Debit
Rent£3,200.00
Credit
Bank£3,200.00
Why?
- Rent: expense incurred → debit
- Bank: asset decreases → credit
Typical mistake
Booking the owner's private rent as an expense: that is drawings.
Your turn
Three problems on exactly this case, with different numbers. Amounts work with or without separators, e.g. 2,400.00 or 2400.
Transaction
Bank statement: standing order for the shop rent, £950.00.
Debit
Assets up · expenses · liabilities down
Total debit£0.00
Credit
Liabilities up · income · assets down
Total credit£0.00
Frequently asked questions
What is the journal entry for rent for business premises?
Example: Rent £3,200.00 / Bank £3,200.00.
How do I recognise this case?
Rent is an expense of the period; without VAT on the invoice there is no input VAT.
What is the typical mistake?
Booking the owner's private rent as an expense: that is drawings.