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Accounting

The path for a Renttown tenant is as follows: The tenant applies to Renttowns program and puts down a $600 earnest deposit. After underwriting the tenant, Renttown provides a budget to the tenant for the purchase of a home. When Renttown is in contract to purchase the home, Renttown pays the title company a Bank Earnest deposit. At the time of close, typically 3 weeks later, Renttown will pay the remaining balance for the home. During the 3-week close process, the tenant signs a 3 year lease agreement with an option to purchase the home at the end of the lease term. The tenant also pays Renttown 2% of the purchase price as a deposit, pro-rated first months rent and a full months rent. These funds are held in a Renttown bank account.

What journal entries would you record for the below:

Purchase price = $200K

Renttown Earnest = $9K

1) $600 earnest deposit

2) 2% down payment

3) Pro-rated 1st months rent = $850

4) 1 st months rent = $1,300

5) Renttowns purchase of the home

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