Accounts receivable journal entry is Debit the Accounts Receivable and Credit the Sales Account. When you make a sale on credit, account receivable is an current which is a shown in balance sheet asset side. You record the amount as an account receivable because the expect to receive the payment in future.
Example: A company sells goods worth ₹50,000 to a customer on credit basis.
Journal Entry:
| Date | Account Title | Debit (INR) | Credit (INR) |
|---|---|---|---|
| 01-08-2024 | Accounts Receivable | 50,000 | |
| 01-08-2024 | To Sales Revenue | 50,000 |
Explanation:
- Accounts Receivable Account Debit: This entry records the amount that the customer owes to the company.
- To Sales Revenue Account Credit: This entry records the revenue earned from the sale might be sales of goods or service.
When the Payment is Received
When the customer eventually pays the amount owed, you would record the following entry:
Example: The customer pays ₹50,000 to settle their account.
Journal Entry:
| Date | Account Title | Debit (INR) | Credit (INR) |
|---|---|---|---|
| 15-08-2024 | Bank/Cash | 50,000 | |
| 15-08-2024 | To Accounts Receivable | 50,000 |
Explanation:
- Bank/Cash Account Debit: This entry records the cash or bank amount received from the customer.
- To Accounts Receivable Account Credit: This entry reduces the receivable balances and reflecting that the amount has been paid.
These entries ensure that the sales and receivables are accurately tracked and also company’s financial records are up-to-date.