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## Daily Accrual Prorating

This is a general run down on how we prorate rent at sites that use daily accrual. This type of proration is a little less intuitive on a day to day basis, but makes sure that the amount from month to month stays the same. The standard per diem for daily accrual is found by dividing the original amount due by 30 and rounding down to the nearest penny. The idea behind this is to treat each month as if it has 30 days in it, and then to adjust later when the month does not.

For example,

If you have a rental that has a rent rate of \$100.00 and a rental period that is from January 1st to January 31st; the standard per diem would be \$3.33 (100/30 = 3.33…).

Next we need to adjust for the fact that not all months have 30 days. This is easily handled for 31 day months, by not recognizing revenue on the 31st. For February we charge them 3 days revenue on the 28th (or 2 days revenue on the 29th if it is a leap year).

Finally we find the difference between the original amount and the amount given if we assumed standard per diem for the period; this will give us the final day supplement. We then add that amount to the final day of the period that recognizes rent.

So returning to the example above, the per diem for January 30th (January 31st does not recognize revenue) would be as follows:

The  original rent \$100.00 minus the standard per diem of \$3.33 times 30 days in the period equals \$0.10. We then add this back into the standard per diem to get January 31st’s per diem of \$3.43 (\$3.33 + \$0.10).

Here are some examples:

(SPD = standard per diem, FDS = final day supplement)

Rental period: January 1st – January 31st (31 days)

SPD = (100/30) = \$3.33
FDS = 100 – (3.33 *30) = \$0.10
January 1st – January 29th = \$3.33
January 30th = \$3.43
January 31st = \$0.00

Rental period: February 1st – February 28th  (28 days)

SPD = (100/30) = \$3.33
FDS = 100 – (3.33 *30) = \$0.10
February 1st – February 27th= \$3.33
February 28th = \$10.09

Rental period: April 1st – April 30th  (30 days)

SPD = (100/30) = \$3.33
FDS = 100 – (3.33 *30) = \$0.10
April 1st – April 29th = \$3.33
April 30th = \$3.43

Rental period: February 15th – March 14th  (28 days)

SPD = (100/30) = \$3.33
FDS = 100 – (3.33 *30) = \$0.10
February 16th – February 27th = \$3.33
February 28th = \$9.99
March1st – March 14th = \$3.33
March 15th = \$3.43

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