Accounts receivable are amounts owed to a service by customers for crmodify sales invoiced to them on account. When a customer pays an invoice, an account receivable collection journal entry is compelled to clear the amount on their account.

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For instance, expect a business offers solutions to a customer and also has invoiced them 3,000 on account, due in 30 days. On the due date, the customer pays the invoice and the balance on the accounts receivable account requirements to be cleared through the following account receivable collections on account journal entry.

Account Receivable Collection Journal Entry

The accountancy records will certainly present the complying with double entry accounting entries for the invoice payment by the customer:


Account Receivable Collection Journal EntryAccountDebitCredit
Cash3,000
Accounts receivable3,000
Total3,0003,000

AR Accounts Receivable Collection Bookmaintaining Explained

DebitCash has actually been got by the organization and demands to be debited to the ascollection account of cash.

CreditThe amount is attributed to the accounts receivable account of the customer to record the truth that the cash has actually been obtained from them. This cash is allocated to the customer invoice and also the balance on the account is cleared.

Accounting Equation for Account Receivable Collection Entry

The audit equation, Assets = Liabilities + Owners Equity suggests that the full assets of the organization are always equal to the total liabilities of the business This is true at any kind of time and also applies to each transaction. For this transactivity the accounting equation is displayed in the complying with table.

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In this situation one ascollection cash increases as the cash is obtained by the organization, and an additional ascollection (accounts receivable) decreases as the account has actually now been cleared by the payment of the invoice.

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Last modified August 9th, 2019 by Michael Brown

About the Author

Chartered accountant Michael Brvery own is the founder and CEO of Double Entry Bookkeeping. He has actually operated as an accountant and consultant for more than 25 years and also has built financial models for all kinds of sectors. He has actually been the CFO or controller of both little and tool sized suppliers and has actually run tiny businesses of his very own. He has actually been a manager and also an auditor via Deloitte, a large 4 audit firm, and also holds a level from Loughbounstable College.


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Posted By: Michael BrownBalance Sheet, Examples
August 9, 2019
Accounts Receivable