Journal Entry Distributions—Receipts

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.

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