Journal Entries of Account Receivables

Account receivables are the major current asset if you sell you goods on credit. When we sell our goods on credit, we make the party account of buyer. When we calculate the receivable  total from  all these parties, it will be account receivables. In simple words, “Account used to record sales made “on account”, meaning that the company has made a sale but has not collected payment.” For example, Reliance Steel and Aluminium project’s financial statement shows 1.016 Billion account receivables. See its chart.

This chart is of 5 years. But we can see this data with different period view. Do, you know, how do we get this important information. Answer is, we get all these information by passing correct journal entries of account receivables. Following are main journal entries of account receivables.
1. When we sell goods on credit 
Account Receivables or Debtor Account Debit
Sales Account Credit 
2. When we receive money from Account Receivables 
Bank Account Debit 
Account Receivables or Debtor Account Credit 
3. When account receivables are converted into bill receivables 
Bill receivable account Debit 
Account Receivables or Debtor  account Credit 
4. When some of customers become bad and these account will be written off with following journal entry.
Bad Debt Account Debit 
Account Receivable Account Credit 
5. When a customer becomes good and gives his previous debt which was written off through bad, it means it is just recovery of bad debt.
Bank Account Debit 
Bad Debts Recovered from Particular Debtor Account  (Specific name of client) Credit 
6. When you sell goods on the basis of credit card 
It means, you accept money through customer’s credit card. 
Let me explain with a simple example.

Reliance mobile company’s online site accepts credit cards. Through credit card, company  recharged Rs. 1,00,000. The credit card company charges 5%. Following will be it journal entry

a) When reliance company get cash immediately from bank after submitting sales invoice 

Cash Account Debit  100,000

Credit Card Charges Debit 5,000

Sales Account Credit 105,000

b) When reliance company has to wait after submitting sales invoice to bank 

1. The entry on the date of sale.

Account Receivable Account Debit  105,000

Sales Account Credit                 105,000

2. The entry on the date that reliance company  receives the cash.

Cash Account Debit       1,00,000

Credit Card Charges Account Debit  5,000

Account Receivables Account Credit  1,05,000