Account Receivable (AR)

Account Receivable
Money owed by customers (individuals or corporations) to another entity in exchange for goods or services (SALE) that have been delivered or used, but not yet paid for. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short time period, ranging from a few days to a year.

Journal entry's

DR Account Receivable
CR Sales

In two ways accounting treatement used to give for uncollectible amount.

1. Provide or Provision or Allowance for Bad Debt
   Amounts that can be expected to be uncollectible for the year of assessment that can be treated as allowance for bad debt.
2. Write off
   When entity realise certain amount can not be collected then entity will pass the entry to write off the amount from the account receivable.

Journal entry's

1. Allowance for bad debt
   DR Bad Debt Expenses
   CR Allowance for Bad Debt
2. Write Off
   DR Allowance for Bad Debt
   CR Account Receivable