Payment Handling
Overview
After customers receive invoices for their orders, payments are often made on the same day or at a later time. Journal entries are needed to track the movement of cash.
Configuration
Required parameters
Fields | Description |
---|---|
date | the calendar date of when the payment was made |
amount | the full amount of the payment |
Required accounts
Account | Description |
---|---|
cash_account | Debit account for the payments. e.g. Cash |
ar_account | Credit account for the payments. e.g. Account Receivable |
Walkthrough
For example, let's say John purchases a Playstation controller from Sony. He pays $70 via his credit card.
Event #1: Invoice is issued
An Invoice is issued for the customer John on the day of 1/1/2022. Subsequently, journal entries are created on the line item record for $70.
Date | Account | Debit Amount | Credit Amount |
---|---|---|---|
01/01/2022 | Account Receivable | $70 | |
Revenue | $70 |
Event #2: Payment is made
When the payment is made on the same day, there is no more collection needed so the Accounts Receivable account is credited the full amount of the purchase, and the asset account for cash is debited.
Date | Account | Debit Amount | Credit Amount |
---|---|---|---|
01/01/2022 | Cash | $70 | |
Accounts Receivable | $70 |
Updated about 1 year ago