Accounts Receivable (Order to Cash or AR) Journal Entries

To record a sale to an account customer
Account	Debit	Credit
Accounts receivable	XXX
Revenue		XXX

To receive a cash payment from an account customer
Account	Debit	Credit
Cash	XXX
Accounts receivable		XXX

To receive a cash payment from an account customer taking cash discount
Account	Debit	Credit
Cash	XXX
Discount allowed	XXX
Accounts receivable		XXX

A credit note is issued to a customer
Account	Debit	Credit
Revenue	XXX
Accounts receivable		XXX

To write off an accounts receivable as a bad debt
Account	Debit	Credit
Bad debt expense	XXX
Accounts receivable		XXX

To set up an allowance for doubtful debts
Account	Debit	Credit
Bad debt expense	XXX
Allowance for doubtful debts		XXX

To use the allowance for doubtful debts to write off an accounts receivable
Account	Debit	Credit
Allowance for doubtful debts	XXX
Accounts receivable		XXX

To record cash received after an accounts receivable has been written off
Account	Debit	Credit
Cash	XXX
Accounts receivable		XXX
Accounts receivable	XXX
Allowance for doubtful debts		XXX

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Sales Order - End to End Journal entries with Detailed Examples

The sales order process involves various steps from the initial customer order to the final recognition of revenue and collection of payment. Below is an end-to-end description of journal entries for the sales order process, along with detailed examples: 1. Customer Order: When a customer places an order, no financial transactions are recorded. This stage represents a commitment to sell but does not impact the accounting records. 2. Sales Order Creation: Once the sales order is created based on the customer's request, the following journal entry is made: Copy code Debit: Accounts Receivable Credit: Sales Order Revenue (Unearned Revenue) This entry recognizes the commitment to deliver goods or services and establishes a liability until the revenue is earned. 3. Order Fulfillment and Shipment: As the company fulfills the order and ships the goods or provides the services, no financial transactions are recorded at this stage. 4. Delivery and Customer Acceptance: When the cu...

End to End Journal Entries for Purchase Orders

Creating end-to-end journal entries for purchase orders involves recording the financial transactions associated with the entire procurement process. Here's a step-by-step breakdown of journal entries related to the purchase order process: 1. Request for Purchase: When a department identifies the need for goods or services and generates a Request for Purchase (RFP) or Purchase Requisition, no financial transactions are recorded at this stage. 2. Vendor Selection and Quotation Comparison: No financial transactions are recorded during the vendor selection or quotation comparison stage. 3. Purchase Order Creation: Once the Purchase Order is created and approved internally, the following journal entry is made: Copy code Debit: Purchase Order Liability Credit: Accounts Payable This entry recognizes the commitment to pay the vendor for the goods or services ordered. 4. Sending the Purchase Order: When the approved Purchase Order is sent to the vendor, there is no financial transacti...

Salary Payable with Journal Entry Examples in Detail

Salary payable refers to the amount of salary that a company owes to its employees but has not yet paid. It represents a liability on the company's balance sheet until the salaries are actually disbursed. When a company recognizes that it owes salaries to its employees, it records a salary payable entry in its accounting records. Here's a detailed explanation along with journal entry examples for better understanding: Journal Entry for Salary Payable: Recognition of Salary Expense: When the company incurs the cost of salaries for its employees, it recognizes the salary expense. This is typically done at the end of the accounting period or when the salaries for that period are due. Journal Entry: Salary Expense Dr. To Salary Payable Debit Salary Expense: This represents an increase in expenses and is recorded on the income statement. Credit Salary Payable: This recognize...

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