The receivables cycle as journal entries.
Invoice → collect (full or partial) → credit notes or discounts → estimate uncollectibles → write off → recover.
Keep the customer subledger in agreement with the Accounts Receivable control account.
On Mar 12, 2026, a client pays $1,150.00 toward Harbor Point Consulting's $4,400.00 invoice #INV-208 and promises the balance next month.
| Cash | $1,150.00 | |
| Accounts Receivable | $1,150.00 |
The receivable falls by the amount collected; $3,250.00 remains outstanding.
On Mar 14, 2026, Little Fern Online Shop issues credit note CN-17 for $240.00 to a customer who returned items bought on account. (Ignore inventory and cost of goods sold for this exercise.)
| Sales Returns and Allowances | $240.00 | |
| Accounts Receivable | $240.00 |
A contra-revenue account keeps gross sales visible while reducing net sales. The customer owes less.
Item 1 of 2
On Mar 12, 2026, a client pays $600.00 toward Harbor Point Consulting's $7,900.00 invoice #INV-208 and promises the balance next month.
AR practice →AR/AP simulator →
Original content. Figures are fictional; examples are generated and checked by our accounting engine. Updated 2026-10-29.