Q. Our organization has a bar-op site, Joe’s Bar, where we conduct both paper and electronic pull-tabs. We pay 20% rent for paper pull-tab net receipts and 15% rent for electronic pull-tab net receipts. In January, our paper pull-tab net receipts totaled $5,000 and our electronic net receipts totaled -$2,000. There were no cash shortages. We paid Joe $700 rent. Was that correct?
A. To determine the rent, multiply the paper net receipts of $5,000 by 20% to get $1,000. Then multiply the electronic pull-tab net receipts of -$2,000 by 15% to get -$300. Then add the $1,000 paper pull-tab rent to the -$300 electronic pull-tab rent to get $700. The rent that you paid Joe for January was correct.
Q. Last month was really slow. We closed just two paper pull-tab games and they both lost money. Our paper net receipts was -$1,500 and we only had $1,000 of electronic net receipts. How much rent do we owe Joe?
A. Your paper pull-tab net receipts of -$1,500 times 20% equals -$300. Your electronic pull-tab net receipts of $1,000 times 15% equals $150. When you add your paper and electronic rent together, you get -$150. Because that amount is negative, no rent is owed to Joe for last month. There’s no carryover of “negative rent” to a subsequent month and the lessor would not owe the organization for any “negative rent”.
Q. Besides our game losses last month, Joe’s Bar was also $30 cash short. Since we don’t owe any rent, does Joe still have to reimburse us for the cash shortage amount?
A. Yes. Joe is required by law to reimburse your organization for the $30 cash shortage. If he doesn’t give you the money, you can deduct it from next month’s rent.