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Accounts Receivables (AR) Journal Entries

 When you create a Transaction (Sales Invoice) in Accounts Receivable (AR)

Receivable A/c                              Dr
      To Revenue A/c 

When you create a Credit Memo (CM) against any Transaction (Sales Invoice)

Revenue A/c                                     Dr
Receivable A/c                                 Dr
         To Receivable A/c 
         To Receivable A/c


When you create Automatic Credit Memo (CM) against any Transaction (Sales Invoice)

 Revenue A/c                                      Dr
 Receivable A/c                                   Dr
           To Receivable A/c
           To Receivable A/c

Revenue Recognition

*If you want to postpone the billing then you have to use "Unbilled Receivables" and if you want to postpone the Revenue then we have to use "Unearned Revenue".

Business Scenario

If we want to bill the customer after 3 months and the accounting is below

Journal Entries

1st month JE
Unbilled Receivables A/c                     Dr
         To Revenue A/c

2nd month JE
Unbilled Receivables A/c                    Dr
          To Revenue A/c

3rd month JE
Unbilled Receivables A/c                    Dr
           To Revenue A/c

After 3 months we have received the money from customer

 Receivables A/c                                   Dr
         To Unbilled Receivables A/c


Business Scenario 

Every month we have to do billing but we should not recognize the revenue and the revenue should be recognized after 3 months then the accounting will be 

Journal Entries

1st month JE
Receivables A/c                             Dr
          To Unearned Revenue

2nd month JE
  Receivables A/c                            Dr
          To Unearned Revenue

3rd month JE
  Receivables A/c                             Dr
           To Unearned Revenue 


After 3 months you have received the amount from customer 
 Unearned Revenue A/c                   Dr
            To Revenue A/c




 




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