Crediting sales is something that happens no matter how hard you try and have your invoices correct, your goods shipped in correct amounts and items. There’s a factor you cannot monitor and that’s you customer for instance. They may decide they want something else, something additional and so on. Thus it’s important to understand that crediting sales is absolutely normal and it’s even more important to understand how one should do it instead of avoiding it.   Continue reading →

Like I mentioned under the accounting entry for simple collection for receivables, there are times when recognizing a collection of a receivable balance can mean that you also have to make not only asset based entries, but also an entry to your profit and loss accounts.   Continue reading →

So there was a receivable you once considered was partly uncollectable. Be the reasons what they are, as it happens, you’ve accounted for the write down (note that you haven’t written the receivable off, but just merely down; that is you’ve accounted for an allowance against the positive asset thus diminishing your assets in total by the amount you considered you will not collect from your customer).   Continue reading →

Say there’s a situation where you consider a receivable being doubtful, you write it down and after a while your customer still pays the balance. How would you treat such a transaction in your accounting?  Continue reading →

Sometimes it happens so that you are unable to collect the receivable and as it happens, you should consider writing it down. Whenever your client has financial difficulties, it’s one of the conditions that should make you doubt the ability of the customer to actually pay up what they owe.  Continue reading →

Making a sale happen is one thing. You’ve accounted for the receivable from the sale, that’s another thing. Getting paid for the sale and collecting the receivable is entirely another matter. In one of our examples we accounted the receivable and we’ve been lucky enough that our client actually owned to what they had to pay and that’s what they did.  Continue reading →

So what do you do? Say the initial invoice was for 1,200 and now it turns out that your supplier was wrong and the actual amount should be 1,100. As such, they’re issuing a credit invoice.  Continue reading →