10.1.4.1 Accounting Entries passed during Account Receivable Liquidation
For example,
Your customer, Mr. Sam Brown has requested you to issue an LC on 01, Jan’98. You have debited a receivable account since Mr. Brown’s account does not have the necessary balance to pay the commission.
On 30, Jan’98 Mr. Brown pays the commission that was due on 01, Jan’98. When you liquidate the commission component of the LC you will have to debit Mr. Brown’s account and credit your debited receivable account.
The accounting entries passed on 01, Jan’98 (the date commission was due
On Liquidation the following entries are passed
Table 10-8 Accounting Entries
| Dr/Cr | Accounting Entries |
|---|---|
| Dr | Commission Receivable Account |
| Cr | Income Account |
Table 10-9 Accounting Entries
| Dr/Cr | Accounting Entries |
|---|---|
| Dr | Mr. Sam Brown’s account |
| Cr | Commission Income account |
Parent topic: Specify Details of Advices for Liquidation