Customer Payment Journal Entry

When a customer makes a payment, it must be recorded in the company’s books. This payment can be for goods sold on credit, services rendered, or an advance payment. Below are the journal entries for different scenarios of customer payments.

Scenario 1: Payment Received for Goods Sold on Credit

Assume a customer pays ₹50,000 for goods previously sold on credit.

Journal Entry for Customer Payment:

Particulars	Debit (₹)	Credit (₹)
Cash/Bank A/c	50,000
To Accounts Receivable A/c		50,000
(Being payment received from a customer for credit sales)

Explanation:

1. Cash/Bank A/c is debited to record the cash inflow.
2. Accounts Receivable A/c is credited to reduce the amount the customer owes.

Scenario 2: Advance Payment Received from Customer

Assume a customer makes an advance payment of ₹30,000 for goods or services to be delivered in the future.

Journal Entry for Advance Payment:

Particulars	Debit (₹)	Credit (₹)
Cash/Bank A/c	30,000
To Customer Advances A/c		30,000
(Being advance payment received from customer)

Explanation:

1. Cash/Bank A/c is debited to record the cash inflow.
2. Customer Advances A/c is credited to record the liability to deliver goods or services in the future.

Scenario 3: Payment Received for Services Rendered

Assume a customer pays ₹20,000 for services rendered.

Journal Entry for Payment Received:

Particulars	Debit (₹)	Credit (₹)
Cash/Bank A/c	20,000
To Service Revenue A/c		20,000
(Being payment received from customer for services rendered)

Explanation:

1. Cash/Bank A/c is debited to record the cash inflow.
2. Service Revenue A/c is credited to record the revenue earned from the services provided.

Summary of Entries

1. Payment Received for Goods Sold on Credit:

   • Debit Cash/Bank A/c
   • Credit Accounts Receivable A/c

2. Advance Payment Received from Customer:

   • Debit Cash/Bank A/c
   • Credit Customer Advances A/c

3. Payment Received for Services Rendered:

   • Debit Cash/Bank A/c
   • Credit Service Revenue A/c