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and now it's time for landlords to learn how to make invoices for rent that was earned what happens at the end of each month well rental income goes up because the landlord actually earned the rent for the passage of time during the month that the tenant stayed and of course unearned rent goes down because there's less unearned if more is earned so when you make an invoice this will be the result in the chart of accounts and the trial balance now what happens to the tenants balance well the tenants balance goes down the tenants balance goes up when they pay therefore the amount in their records will of prepaid the amount that's unearned that's pre paid by the tenant will decrease during the passage of time and we acknowledge the passage of time and we acknowledge earning the rent at the moment that we make an invoice for example on January 31 we need to create invoice number 1 for Dave and apartment 3a for the rent that Holden the landlord earned during January and if you remember Dave pays $1,000 per month so that means that will be the amount of the invoice let's take a look at how to record it we should open the trial balance before we record the transaction remember unearned rental income will decrease by a thousand and become twelve thousand two hundred and rental income that's earned will actually show up for the first time in the trial balance as $1,000 from the mate well from the icon bar we can click invoice now obviously the date of this invoice will be January 31 of 2017 at the end of the first month and the client or the and whom we're making the invoice for his Dave now you have to put one item the only item you have to list on the invoice is rental fees and you only have to put the money amount in the money amount field so in this case our friend Dave by the way if we put his address and the customer Center his address would show up here but our friend Dave now has used one thousand dollars worth of his prepaid rent as of January 31 2017 we could print this for Dave or we could just record it as acknowledgment of what was earned when we click Save and close and this message comes up it's warning us it's letting us know that dave has pre payments that this invoice could be applied to and we're going to talk about that in a few moments for now just click yes and don't worry about this we're going to come back to this window in a moment but let's click cancel for now and take a look at our results in the trial balance and you can see unearned rental income went down to the amount that we predicted and rental income showed up for the first time as $1,000 now let's do our second example imagine the same day January 31 we also needed to create invoice number two for Donna in apartment 4b for the rent that hold and earned during the month of January and if you remember from the previous video donna pays $1,200 a month so how do we record this well again before we record this let's take a look at unearned rent and rental income unearned rent is going to decrease by 1,200 and become an even 11,000 and rental income will increase to $2,200 from the icon bar click invoice now the date is the same January 31 this is invoice number two notice QuickBooks automatically enumerates the invoice while giving you the choice to change the number if you need to in this case the tenant is Donna and if we bother to put her address into the customer center when we chose don and her address would come up here we have to choose the item rental fees and we have to type in the monthly amount of Donna's rent so now we have an invoice for $1,200 for Donna because Holden earned this money during January so at the end of January he can make this invoice that tells QuickBooks to acknowledge earning the money when we click Save and close and don't worry about these credit deals maybe we can click the don't bother me box because we're going to talk about this issue of unapplied credits in just a moment but click no for now and notice the results are in the trial balance exactly what we expected rner and rental income went down by the 1200 to make an even 11,000 and rental income increased by 1200 to make 2200 now you may well ask what is the results in the customer records when we look up at the reports we can click tenant balance detail and we can see for both of these tenants the payment was at the beginning of the month and that's what we owed the tenant in future rent then at the end of the month the balance of what we owed the tenant decreased by their monthly rent and the remaining balance is what we owe the tenant as far as future stay and future rent service Donna the same thing she paid and had a high balance then she stayed for the month of January so her balance that was unearned went down and this is what we currently owe Donna so the total of 11,000 you can think of as the total future rent service that we owe to the tenants regarding their arrangement of how long they should stay so if we owed on a $5,000 of future rent and we owe excuse me we owed Dave 5000 for future rent and we owe Donna 6000 for future rent that means the total that they paid us that still on earned by us is 11,000 and that's equal to the total of unearned rent income in the trial balance $11,000 now let's quickly put in February's invoices for what Holden the Landlord earned during February no problem and we all already know what we can already imagine what the results will be so we click invoice and we'll do Dave first we'll put the date as February 28th and we know we have to put rental fees remember Dave pays $1,000 a month in rent and that's basically it click Save and new to keep the window open you can choose dawn of the tenant for the same date QuickBooks will make it invoice number 4 don't forget the item you have to put as rental fees and Donna pays $1,200 a month in rent and save and close now when we look at the results you can see that unearned rental income is way down and rental income that we actually earned has increased just on a side note if you ever want to see that why this total is equal to this total in the trial balance any number you question you can double click directly on the number and QuickBooks will give you a list of every transaction that caused that ending balance in date order that's called the running balance the balance of the account and the chart of accounts at any given moment of course that's not only true for unearned rental income but for earned rental income and I suggest you double click and look at the dates and transaction types and money amounts to see the running balance of both the unearned and the earned rental income