Partial payments and allocations
Objective: Apply customer payments correctly across invoices.
Recommended first: Invoicing and accounts receivable
Customers often pay part of an invoice or one amount covering several invoices. Apply payments to the invoices the customer specifies; if none, follow the business's stated policy (often oldest first). The general-ledger entry is the same; the subledger detail differs.
Remittance advice — the customer's note explaining what a payment covers — determines how to apply it. Without one, follow the business's policy and contact the customer if unclear. Applying payments correctly keeps aging reports accurate and prevents chasing customers for invoices they have already paid.
Check your work
- Was the payment applied to the invoices the customer specified?
- Does the subledger still agree with the control account?
- Is any remaining balance correct?
When a payment does not match any invoice exactly, record what was received and leave the rest open rather than guessing. Short-payments may reflect a dispute or a deduction the customer took; follow up with the customer and record a credit note only once the reason is agreed.
$1,700 settles invoices of $900 and $800.
| Account | Debit | Credit |
|---|---|---|
| Cash | $1,700.00 | |
| Accounts Receivable | $1,700.00 |
Common mistakes
✗ Applying a payment to the wrong customer.
✓ Check the remittance advice.
Guided practice
Use hints freely here.
Item 1 of 1
Partial payment on an invoice
On Mar 12, 2026, a client pays $800.00 toward Harbor Point Consulting's $6,800.00 invoice #INV-208 and promises the balance next month.
Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 4
One payment for two invoices
On Mar 26, 2026, a client sends one bank transfer of $1,100.00 to settle two open invoices of $500.00 and $600.00. Record the receipt (you may use one or two Accounts Receivable lines).
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References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.