Practice question · Put in order
Order the steps of recording a credit sale (the customer pays later).
- Dr Accounts Receivable, Cr Sales Revenue
- Deliver goods to the customer
- Dr Cash, Cr Accounts Receivable
- Customer pays 30 days later
Hints
- Two separate events occur, each needing its own entry.
- The sale creates a right to collect; the collection extinguishes it.
Show the answer
- Deliver goods to the customer
- Dr Accounts Receivable, Cr Sales Revenue
- Customer pays 30 days later
- Dr Cash, Cr Accounts Receivable
Why
Two events, two entries. At sale: the asset switches from inventory to a receivable and revenue is born. At collection: the receivable converts to cash. Revenue was already recorded at sale, not at collection.
Practise Double-Entry Bookkeeping
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