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hlw, can someone tell me why interest charged and bank refunds of credit balaces is kept on debit side of receivable control account ?? what is bank refunds of credit balances?
Interest:
If we are charging interest to customers because they are late paying, then it means that they will owe us more.
So we Dr Receivables and Cr Interest incomeRefunds:
A refund is simply a repayment to the customer of cash that they paid us. Maybe they accidentally paid us twice, or paid us too much. In that case we need to repay the money to them.
When they paid us the money, we Dr Cash and Cr Receivables. So when we give money back to them, we Cr Cash and Dr Receivables.A little example might help:
Suppose we sell goods for $1000 on credit. We Dr Receivables.
Suppose the customer pays is $1100 (too much by mistake). We Cr Receivables.
That means there is a credit balance of $100.
So….we refund (repay) the $100. Cr Cash and Dr Receivables.Hope that helps 🙂
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thank you very much
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