What should be the general entries for a revenue which was earned in 2007 but not received till January 2008. Please tell me entries for both year 2007 and 2008. I mean, what entry should I make at the end of 2007 for the income I earned but not received, and what would be the entries for the money I received in January 2008, earned Last year. Thank you.
Receivable account would be debit and
income account would credit for e.g.
Interest receivable-debit
Interest income-credit for year 2007
Year 2008
In the year u received cash entry would
Cash Account -Debit
Receivable account-Credit
Because the receivable account should be offset against previous year entry
To account for revenue that was earned in 2007 but was not received until January 2008, you would need to make the appropriate entries in both 2007 and 2008. Here's how you can do it:
1. Entry for the end of 2007:
Debit: Accounts Receivable (Asset Account)
Credit: Revenue (Income Statement Account)
This entry recognizes the revenue earned in 2007 and records it as an Accounts Receivable, indicating that you have the right to receive payment from your customers.
2. Entry for January 2008:
Debit: Cash (Asset Account)
Credit: Accounts Receivable (Asset Account)
This entry recognizes the cash you received in January 2008 and reduces the Accounts Receivable balance since the customer has now paid for the revenue earned in 2007.
Note that the exact accounts used may vary depending on your specific chart of accounts and accounting system. It's always a good idea to consult with an accountant or refer to your organization's accounting policies for the appropriate accounts to use.