Office Rent deposit + 1st month's rent

Accounting
1

Hi,

I have paid one amount which includes the first month’s rent (vatable) and a rental deposit (refundable at the end of the tenancy). How do I allocate this.

I have seen posts about allocating the rental deposit as commercial deposit deposit.
However, I have no idea idea how to split the payment I have made as one is a purchase and the other is a deposit, in the same payment.

Thanks

2

You can record all of it as rent invoice with no vat on deposit element and then just one journal to move deposit bit to balance sheet

Dr Prepayment
Cr Rent Exp

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3

Hi,

Sorry a little lost as not an accountant.

Are you saying that I create an invoice with 2 items. 1 vatable (rent prepayment) and 1 non vatable (deposit). How would I ensure that the non vatable isnt taken as a purchase?

I am unclear about how you move the deposit bit to the balance sheet?

4

It depends on how you record rent and deposit in the first place, if both are recorded as part of one purchase invoice then you can do the journal as stated above else just record rent as the purchase invoice and book prepayment as direct payment from bank (tag it to prepayment a/c)

5

As @FaradayKeynes says… it does all depend on how you have recorded the purchase invoice. You could enter 2 purchase invoices rather than one, one coded to rent and the other coded to prepayments. When tagging the transaction, choose payment to a supplier and pay down multiple invoices.

6

Hi,

Thank you.

All sorted.

The 2 invoices path was far easier.

Thanks
Dipen

7

And if you mark the deposit one as “out of scope” for VAT then it won’t contribute towards box 7 on your return.

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8

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