The assignment of accounts receivable journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of accounts receivable assignment.
In each case the assignment of accounts receivable journal entries show the debit and credit account together with a brief narrative. For a fuller explanation of journal entries, view our examples section, and our tutorial on receivables financing.
Assignment of Accounts Receivable Journal Entries
The assignment of accounts receivable journal entries are based on the following information:
- Accounts receivable 50,000 on 45 days terms
- Assignment fee of 1% (500)
- Initial advance of 80% (40,000)
- Cash received from customers 6,000
- Interest on advances at 9%, outstanding on average for 40 days (40,000 x 9% x 40 / 365 = 395)
Journals
Customer invoice creation journal
| Account
| Debit |
Credit |
| Accounts receivable |
50,000 |
| Revenue |
|
50,000 |
To transfer accounts receivable to assigned accounts receivable
| Account
| Debit |
Credit |
| Assigned accounts receivable |
50,000 |
| Accounts receivable |
|
50,000 |
Cash advance less fee received from financing company
| Account
| Debit |
Credit |
| Cash (advance) |
39,500 |
|
| Assignment fees |
500 |
|
| Loan or Note Payable |
|
40,000 |
Cash received from customers journal
| Account
| Debit |
Credit |
| Cash |
6,000 |
|
| Assigned accounts receivable |
|
6,000 |
Monthly interest on the cash advance balance
| Account
| Debit |
Credit |
| Interest expense |
395 |
|
| Loan or Note payable |
|
395 |
Cash from customers and interest both paid to financing company
| Account
| Debit |
Credit |
| Cash |
|
6,395 |
| Loan or Note payable |
6,395 |
|
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.
