Journal Entry Distributions—Receipts

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Receipts are posted to the General Ledger in the following manner:

Cash Receipts Journal

Transaction

Debits

Credits

Payment of invoice on account

Cash

Accounts Receivable*

Sales discount applied to an invoice

Sales Discount Income

Cash

Prepayment

Cash

Accounts Receivable*

Apply prepayment to invoice

Accounts Receivable*

Cash

Cash sale of non-stock, labor, and service items

Cash, Cost of Sales

Sales Income, Salary and Wage Expense (or miscellaneous item expense), and Sales Tax Payable

Cash sale of stock or assembly

Cash, Cost of Sales

Sales Income, Inventory, and Sales Tax Payable

*For companies using the cash-basis accounting method, Accounts Receivable is replaced with <Cash Basis> and is not recorded in the General Ledger. Instead, income and cash are recorded when payment is received for the sale.