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<p class="wp-block-paragraph"><em>We are Sharing With You Accounts Receivable (A/R) entries during an interview: . So kindly Check Out our www.castudynotes.com website and ALL the Best for Your upcoming Interviews.</em></p>
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<h2 class="wp-block-heading"><strong><mark style="background-color:rgba(0, 0, 0, 0)" class="has-inline-color has-highlight-color">Accounts Receivable (A/R) entries during an interview:</mark></strong></h2>



<p class="has-text-align-justify wp-block-paragraph"><br><br>1. <strong>Sale on Credit (Invoice Creation)</strong><br>When a company sells goods or services on credit, it creates an account receivable, reflecting the amount the customer owes.<br>This transaction increases the company&#8217;s assets (A/R) and recognizes revenue.<br><br><strong><em>Journal Entry:</em></strong><br>Dr: Accounts Receivable (A/R)<br>Increases the A/R account, representing the money owed by customers.<br>Cr: Sales Revenue (or Service Revenue)<br>Recognizes the revenue earned from the sale.<br><br>Ex: If a company sells $5,000 worth of goods on Cr, the journal entry would be:<br>Dr: Accounts Receivable $5,000<br>Cr: Sales Revenue $5,000<br><br>2.<strong> Collection of Receivables</strong><br>When the customer pays the amount owed, the cash account increases and the A/R account decreases.<br>This reflects the receipt of cash and the settlement of the receivable.<br><br><strong><em>Journal Entry:<br></em></strong>Dr: Cash or Bank<br>Increases the cash or bank account with the amount received.<br>Cr: Accounts Receivable (A/R)<br>It decreases the A/R account as the receivable has been settled.<br><br>Ex: If the customer pays $5,000 in cash, the entry would be:<br>Dr: Cash $5,000<br>Cr: Accounts Receivable $5,000<br><br>3. <strong>Bad Debt Expense (Writing Off Uncollectible Receivables)</strong><br>Sometimes, customers may be unable to pay their dues, and the company must recognize this as a loss.<br>Writing off a receivable involves removing it from the A/R account and recording it as an expense.<br><br><strong><em>Journal Entry:<br></em></strong>Dr: Bad Debt Expense<br>Records the uncollectible amount as an expense, impacting the income statement.<br>Cr: Accounts Receivable (A/R)<br>Removes the uncollectible amount from the A/R account.<br><br>Ex: If $500 of receivables is deemed uncollectible, the entry would be:<br>Dr: Bad Debt Expense $500<br>Cr: Accounts Receivable $500<br><br>4. <strong>Adjusting Entry: Allowance for Doubtful Accounts</strong><br>Companies may estimate that a portion of their receivables will not be collected and make an adjusting entry to reflect this.<br>This method is more accurate as it matches potential losses with the revenues generated in the same period.<br><br><strong><em>Journal Entry:</em></strong><br>Dr: Bad Debt Expense<br>Recognizes the estimated uncollectible receivables as an expense.<br>Cr: Allowance for Doubtful Accounts<br>Creates a contra-asset account to offset the A/R balance.<br><br>Ex: If a company estimates that $1,000 of its $50,000 in receivables may not be collected, the entry would be:<br>Dr: Bad Debt Expense $1,000<br>Cr: Allowance for Doubtful Accounts $1,000<br><br>5. <strong>Recovery of Previously Written-off Accounts<br></strong>Occasionally, a customer might pay after their account has been written off. In such cases, the original write-off is reversed, and the payment is recorded.<br><br><strong><em>Journal Entries:<br></em></strong>Reverse the Write-Off:<br>Dr: Accounts Receivable<br>Cr: Bad Debt Expense (or Allowance for Doubtful Accounts)<br>Record the Payment:<br>Dr: Cash or Bank<br>Cr: Accounts Receivable<br><br>Ex: If a previously written-off $200 receivable is recovered, the entries would be:<br>Reverse Write-Off:<br>Dr: Accounts Receivable $200<br>Cr: Bad Debt Expense $200<br>Record Payment:<br>Dr: Cash $200<br>Cr: Accounts Receivable $200</p>



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