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Account receivable journal entry

Account receivable journal entry

January 7, 2022 by J.K. Bhardwaj

Table of Contents

  • Account receivable journal entry
    • Account receivables?
    • Account receivable journal entry
      • Example:
      • Rules –   
    • Account receivable Journal entry-
      • Rules-   
    • Account receivable Journal entry-

Account receivable journal entry

Account receivables?

Accounts receivables are the amounts receivable by the business enterprise against goods sold on credit and services rendered in the normal course of business. Accounts receivables are the sum total of debtors and bills receivable.

Debtor- A debtor is a person or an entity who owes an amount to the business enterprise against credit sales of goods and/or services rendered. For example, Mr.x  bought goods on credit from Mr.y for $10,000. Mr.x is a debtor to Mr.y till he pays the value of the goods.
Bills receivable-Bills receivable means a bill of exchange accepted by a debtor, the amount of which will be received on the specified date.

  • Accounts Receivables are Current assets in the books of the seller because the customer owes him an amount of money to pay against the goods and services already delivered by the seller.
  • Accounts Receivable appears on the assets side of the balance sheet under the heads of current assets.

Account receivable journal entry

General entry is made for Account Receivable as follows:

Example:

On Jan 1, 2021, X. ltd sold goods on credit to  Mr. P. The calculated amount of the invoice, including all taxes, was $50000 to be paid on or before Jan 31, 2021. Mr.P made the full payment of $50000 on Jan 30, 2021. Pass Journal Entry in the books of X.ltd.

On Jan 1, 2021, X. ltd Sold goods on credit to  Mr. P. $50000

P’s Account Or Account receivable Account       (Assets Account)

Sales  Account     (Revenue Account)

Assets increase in form of Account receivable 

Revenue  increase in form of sales 

Rules –   

Increases in assets are debits; decreases in assets are credits.

Increases in incomes and gains are credits;  decreases in incomes and gains are debits.

Account receivable Journal entry-

Account receivable journal entry
Account receivable journal entry

Mr.P made the full payment of $50000 on Jan 30, 2021.

Cash Account    (Assets Account)

P’s Account Or Account receivable Account       (Assets Account)

Assets increase in form of Cash

Assets decrease in form of Account receivable 

Rules-   

Increases in assets are debits; decreases in assets are credits.

Account receivable Journal entry-

Account receivable journal entry
Account receivable journal entry

Also read: Golden Rules Of Accounting

Also read: List of current assets and current liabilities

 

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