How to Post Cash Collected on Accounts Receivable

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Accounts receivable shows cash owed to a company by its customers.
Accounts receivable shows cash owed to a company by its customers. (Image: Photos.com/Photos.com/Getty Images)

A company can make sales and allow customers to pay later. A company keeps track of the total money all customers owe in an account called accounts receivable in its general ledger and monitors the money each customer owes in an accounts receivable subsidiary ledger. A general ledger and subsidiary ledger are books that contain a list of accounting transactions. Each account in a ledger has a debit column and a credit column in which you list dollar amounts of transactions. You can post the amount of cash collected in your general and subsidiary ledger to reflect a payment from a customer.

Write the amount of cash collected in the debit column of your cash account in your general ledger. Amounts in the debit column represent increases in the cash account. Include the date in the date column and a description in the description column. For example, record a cash collection of $5,000 from XYZ Company by writing “1/5” in the date column, “Payment from XYZ Company” in the description column and “$5,000” in the debit column of the cash account.

Add the amount of cash collected to the previous balance in your cash account to determine the new balance. For example, add $5,000 to a previous balance of $10,000. This equals a new balance of $15,000.

Write the amount of cash collected in the credit column of your accounts receivable account in your general ledger. Amounts in the credit column represent decreases in accounts receivable. Include the date and description in their respective columns. For example, write “$5,000” in the credit column, and write “1/5” and “Payment from XYZ Company” in their respective columns of your accounts receivable account in your general ledger.

Subtract the amount from the previous balance in your accounts receivable account to determine the new balance. For example, subtract $5,000 from a previous balance of $25,000. This equals a new balance of $20,000, which represents the total money all customers still owe.

Write the amount of cash collected in the credit column of the accounts receivable subsidiary ledger account for the specific customer from which the cash was collected. Amounts in the credit column represent decreases in an accounts receivable subsidiary ledger account. Include the date and description. For example, write “$5,000” in the credit column, and write “1/5” and “Payment received” in their respective columns of the accounts receivable subsidiary account for XYZ Company.

Subtract the amount collected from the previous balance of the accounts receivable subsidiary ledger account for the specific customer to determine the new balance. For example, subtract $5,000 from a previous balance of $7,000. This equals a new balance of $2,000, which shows that XYZ Company still owes you $2,000.

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