Definition of Rent Receivable
Rent Receivable is an asset account in the general ledger of a landlord which reports the amount of rent that has been earned but not received as of the date of the balance sheet.
Definition of Rent Payable
Rent Payable is a liability account in the general ledger of the tenant which reports the amount of rent owed as the date of the balance sheet.
Example of Rent Receivable and Rent Payable
For simplicity, assume that the landlord owns just one property and the tenant pays rent only to this landlord. Both parties use the accrual method of accounting and issue monthly financial statements. The rent is $2,000 per month and it is due on the first day of each month.
If the rent is paid when due, the landlord's and tenant's balance sheets as of the last day of every month will report zero balances in Rent Receivable and Rent Payable. However, if the tenant has not paid the June rent as of June 30, the landlord will report Rent Receivable of $2,000 and the tenant will report Rent Payable of $2,000.