What will be the journal entry of rent paid on behalf of jassi???
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Answer:
The question is “A is liable to pay rent to C. But B pays rent to C on behalf of A. What is the journal entry in the books of A, B, and C?”
Well, the transaction of rent is directly related to “A” and “C” only. However, it is actually fulfilled by “B”. Hence, the pending transaction lies between “A” and “B” only, after “B” has paid the rent to “C”.
Since the rent is charged monthly, every month a landlord (C) passes a rent accrued entry, whereas a tenant (A) does rent due entry respectively in their book of accounts on the last day of every month. In addition to this, some reversal entries are obliged to pass in a journal proper book to settle/close the accounts among the three parties. especially, in this case because the rent is paid by B ,who is a third party indirectly concerned with this event of a transaction.
Elaborately, it is explained subject to the above question as under:
In the books of “A” two entries as follow:
Rent Due A/c--Dr
To “ C” A/c
(Being the entry passed for the rent due)
“C” A/c -Dr
To “ B” A/c
(Being reversal entry for the rent paid by “B” on behalf of us to “C”.)
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