I am working in retail sector and need to manage multiple sites rent, service charge and insurance. They are leased property and we use normal accounting software like Xero rather than property management software. The landlord/managing agent will send us the rent, service charge quarterly. I have several questions here:
1. The rent invoices are issued quarterly on dates of 25 Mar, 24 Jun, 29 Sep and 25 Dec. We normally paid them in advance. My understanding is that I put the invoice to prepayment account and set up repeating manual journal on every calendar month end transferring from the prepayment to rent account. I am not sure if it is right to do this double entry at month end since the rent period is ending 25 Mar, 24 Jun, 29 Sep and 25 Dec.
For example: the rent invoice period is for 29 Sep 2021 - 24 Dec 2021 at amount £5500, the tax point is 09 Sep 2021, we paid the invoice on 27 Sep 2021. I book the invoice into prepayment account on 27 Sep 2021, then do the double entry to transfer one month rent (for October rent) £1833.33 from prepayment to rent account on 31 Oct 2021. Please let me know if above understanding is right. Further question is that, if there is rent free period, how much should I book for each month on accounting software.
2. For the service charge double entry, our previous outsourced accountanut put the service charge into rates account, which I think is not correct. Should I create a new charter of account only for service charge issued by landlords/managing agents? For service charge double entry, is it the same logic to rent? The same question is as to building insurance.
Thank you all in advance!