USA Real Estate Accounting - Distribution from the Invested Property


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Hi,

I'm new to Real Estate industry and wanted to seek some help with journal entries.

Here's the scenario. The property we purchased is generating cash flows and we're wanting to distribute the positive cash flows (just the amount that property has generated and not any of the original investment) back to the investors. Looking for someone to confirm the below JE that I believe should happen:

  • Recording cash outflow from the Property - credit cash and debit Equity (Capital Distribution)
  • Recording receipt of cash in Investment Entity - debit cash and credit Investment account
  • Recording outflow of cash in Investment Entity to Investors - credit cash and debit Equity - Capital Distribution
Would appreciate the feedback. Thanks.
 
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Drmdcpa

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I do not understand the difference between the first and third. If the first is about expenses, the debit would go to the particular expense acct.

For cash receipts the credit should go to an income acct unless it is borrowings or refund of expenses. In the latter case it should credit the expense. For borrowings the credit goes to a liability.
 

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