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A company receives payment from one of its customers on August 5 for services performed on July 21. Which of the following entries would be recorded if the company uses accrual basis​ accounting?

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Answer:

Cash ( or Banks )               Debit

Accounts Receivables      Credit

Explanation:

According to accrual basis accounting, the Sale was recorded in July, as follows:

Accounts Receivables     Debit

Sales                                 Credit

So, in August the company must book:

Cash ( or Banks )               Debit

Accounts Receivables      Credit

In this way, AR balance = zero ( no pending credit to be collected )

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