Payment Handling


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.


Required parameters

datethe calendar date of when the payment was made
amountthe full amount of the payment

Required accounts

cash_accountDebit account for the payments. e.g. Cash
ar_accountCredit account for the payments. e.g. Account Receivable


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.

DateAccountDebit AmountCredit Amount
01/01/2022Account Receivable$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.

DateAccountDebit AmountCredit Amount
Accounts Receivable$70