Starting December 2021, Real Estate leases classified as an operating expense will need to be documented as a liability instead. Due to this change, the Rent GL Account listed in R365 will need to be adjusted by following the process below.
If you have any questions about this mandate, reach out to your CPA for more information.
Update the Rent GL Account in R365
The Rent GL Account will need to be disabled and have a new GL Account created for it. Once completed, a memorized AP Transaction or Bank Expense should be created for monthly rent charges.
Step 1: Set up a New GL Account
Create a new GL Account for Rent and select 'Current Liability' as the GL Type. Save and close the record.
Step 2: Disable the Original Rent GL Account
The original Rent GL Account will no longer be active but will need to stay in the system for historical reporting purposes. Due to this, the original Rent GL Account will need to be disabled.
To do this, open the original Rent GL Account record and check the 'Subtotal - Disable Entry' box on the 'General' tab. Then, save and close the record.
Step 3: Create a Reoccurring Transaction
Create a monthly reoccurring Bank Expense/Withdrawal or memorized AP Invoice specifically for rent. This will cause rent to appear on the Bank Reconciliation. Click here to learn how to set up a memorized AP Transaction.