Recording Cash Receipts
Once
the money comes in from outstanding receivables,
you must apply it to the accounting records to
reduce the accounts receivable balance.
Real life
You
open the mail when it is delivered and, 10 and
behold, there's a check from one of your
customers for product they bought 30 days
before. Let's say it's the same customer as is
the above example. You fill out a deposit slip
for the check and deposit it into the company's
bank account.
Accounting world
Now you need to
reflect the cash receipt in the books. The entry
is as follows:
DR Cash
$1,380
CR Accounts
receivable
$1,380
You
do not record anything in the sales account or the
retail tax liability account because you have
already done that in a prior period. You just need
to reflect the increase in your bank account and the
fact that the amount is no longer receivable.
In
your subledger, you will show that the amount was
paid and the date of payment. If you are on a
computerized system, you will go into the cash
receipts journal and indicate the customer, date,
amount of payment, and method of payment. The system
will automatically record the entries to the
journals and the accounts receivable subledger.
Recording Cash
Receipts
