Receivables

A sample should include not only the largest balances, but others which have a greater risk of misstatement. For example, an old balance could be old because the customer won’t pay it because of an error – e.g. it isn’t their invoice(s) that have been posted to their account.

The entries to a receivable a/c are:
Dr Receivable/Cr Sale
and
Dr Cash/Cr Receivable

One valid reason why there might be a Cr balance on a customers a/c is that they pay a deposit (the revenue recognition implications of this are not examinable in AA). But could also indicate an error – e.g. if the customers invoice(s) have been posted to another customer’s a/c.

I was suggesting that invoice posted to wrong a/c (i.e. no corresponding debit) would give rise to a credit balance. But yes, posting cash to a wrong customer’s account (as you have illustrated) could also result in credit.

Or a customer paying twice, in error, could also result in a credit balance.

ABC Co is sent an invoice fit $300 which it duly pays but the invoice is posted to the a/c of BAC Co. I.e. no corresponding debit in ABC’s a/c.

ABC has a $300 credit balance
BAC has a $300 debit balance … this will become an old debt if not corrected because BAC won’t pay an invoice that isn’t theirs.