9 Accounts Receivable
NRV and the Allowance Method
So that’s how we record A/R for retailers and wholesalers. In these sales transactions there are physical goods involved, like dog crates, for example. But what about service companies? Let’s take a look at a service company now:
- My Turn:
- Joey’s Moving Co. provides moving services to commercial companies. Help Joey record the following transaction for June 20X8 (ignoring sales taxes).
- 2 June:
- Joey moves a fish aquarium for FishBowl Ltd. at a price of $2,500 on account.
| DR | A/R (FishBowl Ltd.) | 2,500 | ||
| CR | Service Revenue | 2,500 |
Joey performed a service, so there is no inventory involved. Therefore, no COGS/Inventory journal entry is recorded.
Now it’s your turn. Continue the Joey’s example and give it your best!
Your Turn:9—2: Joey’s Moving Co.
Solution:9—2: Solution
Great work!! Now that you have some practice with debits and credits, let’s look back at the Statement of Financial Position.
