If a hotel rents a room for $2500. and there is an advance payment of $500, how is this posted in the city ledger
To post this transaction in the city ledger, you would follow these steps:
1. Determine the account categories involved: In this case, you would need accounts for Accounts Receivable (representing the amount the hotel is due) and Cash (to record the advance payment).
2. Post the advance payment: Debit the Cash account for $500, representing the amount received, and credit the Accounts Receivable account for $500, showing that the hotel owes the remaining balance.
3. Post the remaining room rent: When the actual stay takes place, you would debit the Accounts Receivable account for $2000 (the remaining balance), and credit the Room Revenue account or a similar revenue account representing the income generated by room rentals.
Here's how it would look:
City Ledger
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Accounts Receivable: $500 (credit) - Advance payment
Accounts Receivable: $2000 (debit) - Remaining room rent
Room Revenue: $2500 (credit) - Room rental income
Please note that the specific account names and classification may vary depending on the hotel's chart of accounts or accounting system. It's always advisable to consult the hotel's accounting policies or an accountant for accurate recording.