Cash Receivable Journal Entry is Debit the Accounts Receivable and Credit the Sales Account. Cash Receivable typically refers to the situation where a business expects to receive cash in the near future, often from customers who owe money for goods or services provided. This is generally recorded under Accounts Receivable until the cash is actually received.
Here are some examples of how to record Cash Receivable (or Accounts Receivable) in different scenarios:
Example 1: Sale on Credit
Your business sells goods worth $15,000 to a customer on August 10, 2024, with the agreement that the customer will pay the amount within 30 days.
Journal Entry on August 10, 2024:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 08-10-2024 | Accounts Receivable | 15,000 | |
| 08-10-2024 | To Sales | 15,000 |
Explanation:
- Accounts Receivable is debited to recognize the amount the customer owes.
- Sales is credited to record the revenue from the sale.
Example 2: Cash Received from a Customer
On September 10, 2024, the customer pays the $15,000 that was owed from the sale on August 10, 2024.
Journal Entry on September 10, 2024:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09-10-2024 | Cash | 15,000 | |
| 09-10-2024 | To Accounts Receivable | 15,000 |
Explanation:
- Cash is debited to record the receipt of cash from the customer.
- Accounts Receivable is credited to reduce the amount owed by the customer.
Example 3: Partial Payment Received
Your business sold goods worth $20,000 on credit. On September 15, 2024, the customer makes a partial payment of $8,000.
Journal Entry on September 15, 2024:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09-15-2024 | Cash | 8,000 | |
| 09-15-2024 | To Accounts Receivable | 8,000 |
Explanation:
- Cash is debited for the partial payment received.
- Accounts Receivable is credited to reduce the amount the customer still owes.
Example 4: Write-off of Uncollectible Accounts
Your business determines that a $2,000 receivable from a customer is uncollectible on November 30, 2024.
Journal Entry on November 30, 2024:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 11-30-2024 | Bad Debt Expense | 2,000 | |
| 11-30-2024 | To Accounts Receivable | 2,000 |
Explanation:
- Bad Debt Expense is debited to recognize the loss from the uncollectible receivable.
- Accounts Receivable is credited to remove the uncollectible amount from the books.
Example 5: Cash Received After Write-off
After writing off the $2,000 as uncollectible, the customer unexpectedly pays the amount on December 20, 2024.
Journal Entry on December 20, 2024 (Reversing the Write-off):
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 12-20-2024 | Accounts Receivable | 2,000 | |
| 12-20-2024 | To Bad Debt Expense | 2,000 |
Journal Entry on December 20, 2024 (Recording the Cash Receipt):
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 12-20-2024 | Cash | 2,000 | |
| 12-20-2024 | To Accounts Receivable | 2,000 |
Explanation:
- First, the Accounts Receivable is reinstated by reversing the previous write-off.
- Then, Cash is debited to record the payment received, and Accounts Receivable is credited to remove the receivable from the books.
Example 6: Recording an Advance Payment
Your business receives an advance payment of $5,000 from a customer on October 5, 2024, for goods to be delivered next month.
Journal Entry on October 5, 2024:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 10-05-2024 | Cash | 5,000 | |
| 10-05-2024 | To Unearned Revenue | 5,000 |
Explanation:
- Cash is debited for the advance payment received.
- Unearned Revenue is credited to recognize the liability for the goods that are yet to be delivered.
These examples illustrate various scenarios in which Cash Receivable (or Accounts Receivable) might be recorded, helping you manage your business’s finances effectively. Each entry ensures that your accounting records accurately reflect your company’s financial transactions.