What is Accrued Rent Receivable?

Accrued rent receivable is the amount of rent that a landlord has earned, but for which payment from the tenant is still outstanding. This situation arises when a tenant has made use of property owned by the landlord, but has not yet paid the agreed-upon amount of rent for that usage period. This entry is made as part of the closing process at the end of each reporting period.

Example of Accrued Rent Receivable

A landlord rents out a commercial property to a tenant for $10,000 per month, with rent due on the first business day of each month. However, as of December 31 (the end of the accounting period), the tenant has not yet paid the rent for December, but the landlord has already earned it by allowing the tenant to occupy the property. In this case, the landlord records a debit to its accrued rent receivable account for $10,000, and a credit to its rent revenue account for $10,000. This represents the amount the landlord expects to receive from the tenant for rent earned but not yet paid. A few days later, the tenant pays the $10,000. The landlord records this entry with a debit to its cash account for $10,000, and a credit to its accrued rent receivable account (which eliminates the accrual).

Presentation of Accrued Rent Receivable

The accrued rent receivable account is considered a current asset, since rent is typically due within the next year. A landlord could offset this receivable with an allowance for doubtful accounts, if there is a probability that a tenant will not pay rent.