Journal entry for office rent expense

[Allauddin Patel]

What is journal entry for office rent paid by proprietor from savings account ?

Savings account also maintained in books of account of proprietor ...

[Sanjeev Agarwal]

If the proprietor pays office rent from his personal savings bank account, but that savings bank account is also maintained in the books of the proprietorship, then the accounting depends on what that bank account represents in the books.

If the savings account is treated as a business bank account

The entry is straightforward:

Office Rent A/c Dr.
To Savings Bank A/c

For example, rent Rs. 30,000:

Particulars	Dr.	Cr.
Office Rent A/c	Rs. 30,000
To Savings Bank A/c		Rs. 30,000

This is appropriate if the savings account is actually a bank ledger maintained as part of the proprietorship's books and the payment is being recorded through that account.

But if the proprietor paid from his personal savings account

Then you should not credit the business bank account merely because the proprietor has a savings account that is separately maintained in the books.

The proper entry would generally be:

Office Rent A/c Dr.
To Proprietor's Capital A/c

Rs. 30,000

This represents additional capital introduced by the proprietor in the form of payment of a business expense.

If you maintain a separate Proprietor's Drawings/Personal A/c for such transactions, the treatment can differ depending on how the personal bank account is incorporated into the books.

Key distinction: Is this savings account a business bank account appearing under the firm's/business books, or is it the proprietor's personal savings account whose transactions are being tracked in the books? That distinction determines the cleanest entry.

If you tell me how you have created the ledger for this savings account (e.g., under Bank Accounts / Capital / Personal Account), I can give you the exact entry and explain the balance-sheet presentation.

AI Summary

Office rent accounting depends on whether the savings account is a business bank ledger or proprietor's personal account.
Office rent paid through a savings account is accounted for according to whether that account is a business bank ledger or the proprietor's personal account. If it is part of the business books, debit Office Rent Account and credit Savings Bank Account. If the proprietor pays from a personal savings account, debit Office Rent Account and generally credit Proprietor's Capital Account, reflecting capital introduced for a business expense. Classification of the savings account determines the proper entry and balance-sheet presentation.