O level Accounting notes on Trade Receivables

POA Notes for Trade receivables
Double entries to memorize for Trade receivables

When goods or services are sold on credit

Dr Trade receivables- Name of credit customer +Assets (debit nature)

Cr Sales revenue/Service fee revenue +Income (credit nature)



Return of goods

Dr Sales Returns +Contra income (debit nature)

Cr Trade receivables- Name of credit customer -Assets (debit nature)



Collecting payment from credit customers

Dr Cash at bank/ Cash in hand +Asset (debit nature)

Dr Discount allowed (%discount X trade receivables) +Expenses (credit nature)

Cr Trade receivables- Name of credit customer -Asset (debit nature)



Creation or increasing an allowance for impairment loss on trade receivables

Dr Impairment loss on trade receivables +Expenses (credit nature)

Cr Allowance for impairment of trade receivables +Contra asset (credit nature)


1
Decreasing allowance for impairment loss on trade receivables

Dr Allowance for impairment loss on trade receivables -Contra asset (credit nature)

Cr Impairment loss on trade receivables -Expenses (credit nature)




1 WE ONLY ADJUST THE ALLOWANCE AT THE END OF A FISCAL YEAR


1

, Writing off debt by using the allowance

Dr Allowance for impairment of trade receivables -Contra asset (credit nature)

Cr Trade receivables- Name of credit customer -Asset (debit nature)




2