This guide provides a quick reference for general accounting entries related to Earnings Operation Accounts Receivable. This is broken down into three sections. Workday Accounts Receivable, External Systems Accounts Receivable, and Collections and Write-Offs. While this guide is extensive, it is not exhaustive so there may be some instances where entries differ from this guide. Additionally, this guide is only intended to cover accounting entries related to Earnings Operation Activity, and therefore may not apply to Grants or other Account Receivable activity.
Table of Contents:
- Customer Invoice
- Customer Invoice with Sales Tax
- Customer Invoice Adjustment - Increase Amount Due
- Customer Invoice Adjustment - Decrease Amount Due
- Customer Invoice with Deferred Revenue
- Customer Payment with Deposit
- Customer Payment with Unapplied Deposit
External Systems Accounts Receivables
- Invoice
- Invoice with Sales Tax
- Invoice with Deferred Revenue
- Cash Sale with Deposit
- Cash Sale with Unapplied Deposit
- Workday Customer Invoice (Originating in Workday)
- Collections Invoice (Originated in Third-Party System)
- Customer Payment and Deposit
- Write-Off
Allowance for Doubtful Accounts
Balancing Worktags
Many of the entries for Accounts Receivable post to the balance sheet. It is important to remember that in most cases entries made to the balance sheet will only include Balancing Worktags. OSU’s Balancing Worktags are: Balancing Unit, Fund, Gift, Grant, Project, and Company. This means for your earnings operations your balance sheet will be generated at the Balancing Unit and Fund level.
With Accounts Receivable Balance Sheet ledger accounts start with a 1 (assets) or a 2 (liabilities).
Workday Accounts Receivable:
This section will cover the basic accounting entries for the most common scenarios with Workday Accounts Receivable. In this section the accounting entries are generated automatically by Workday.
Customer Invoice:
The most basic scenario is the creation of the Customer Invoice in Workday. When created your invoice will generate a journal entry with a debit to ledger account 12000: Accounts Receivable, and a credit to 42000: Sales and Service along with the Revenue Category selected on the invoice line.
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12000: Accounts Receivable | $100.00 | X | ||
| 42000: Sales and Services | $100.00 | X | RC from Invoice |
Customer Invoice with Sales Tax:
In situations where sales tax applies, the Customer Invoice would generate a debit for the full amount owed (goods and tax) to 12000: Accounts Receivable, and two credit lines. The first credit line would be for only the tax amount which would go to 205000 Accrued Sales Tax, and the amount charged for the goods to 42000: Sales and Service along with the Revenue Category selected on the invoice line.
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12000: Accounts Receivable | $107.50 | X | ||
| 20500: Accrued Sales Tax | $7.50 | X | ||
| 42000: Sales and Services | $100.00 | X | RC from Invoice |
Customer Invoice Adjustment – Increase amount due:
With Customer Invoice Adjustments the entries for the original invoice remain the same. The adjustment will generate its own journal entry which posts to the same ledger accounts as the original invoice, and will only be for the amount of the adjustment. So if you increase your invoice by $25.00 the adjustment would only generate accounting entries in that amount.
When increasing the amount due, the journal will debit ledger 12000: Accounts Receivable and credit 42000: Sales and Service.
Original Invoice:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12000: Accounts Receivable | $100.00 | X | ||
| 42000: Sales and Services | $100.00 | X | RC from Invoice |
Adjustment – Increase by $25.00:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12000: Accounts Receivable | $25.00 | X | ||
| 42000: Sales and Services | $25.00 | X | RC from Invoice |
Customer Invoice Adjustment – Decrease amount due:
With Customer Invoice Adjustments the entries for the original invoice remain the same. The adjustment will generate its own journal entry which posts to the same ledger accounts as original invoice, and will only be for the amount of the adjustment. So if you decrease your invoice by $25.00 the adjustment would only generate accounting entries in that amount.
When decreasing the amount due, the journal will credit ledger 12000: Accounts Receivable and debit 42000: Sales and Service.
Original Invoice:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12000: Accounts Receivable | $100.00 | X | ||
| 42000: Sales and Services | $100.00 | X | RC from Invoice |
Adjustment – Decrease by $25.00:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 42000: Sales and Services | $25.00 | X | ||
| 12000: Accounts Receivable | $25.00 | X | RC from Invoice |
Customer Invoice with Deferred Revenue:
Deferred Revenue is used when payment/cash will be received prior to the services being rendered, or good delivered to the customer. In these instances a deferred revenue accounting treatment should be applied, which can be done directly on the Customer Invoice.
When deferred Revenue is marked on a Customer Invoice line that tells Workday that the revenue should not be immediately recorded for that line because it has not yet been earned (i.e. the service not rendered or goods not delivered to the customer). When you select deferred revenue, you will also select the appropriate schedule for your revenue to be recognized. When the Customer Invoice is created the journal will create a debit to ledger account 12000: Accounts Receivable as we have seen before, however instead of the credit being posted to revenue, it will post to ledger account 23000: Deferred Revenue. A separate journal, or journal entries will subsequently be posted to recognize the revenue based on the schedule selected.
Customer Invoice:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12000: Accounts Receivable | $1,200.00 | X | ||
| 23000: Deferred Revenue | $1,200.00 | X | RC from Invoice |
As revenue gets recognized, a journal entry will be generated to debit ledger account 23000: Deferred Revenue and credit ledger account 42000: Sales and Service along with the Revenue Category you selected on the invoice line.
Revenue Recognition:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 23000: Deferred Revenue | $100.00 | X | RC from Invoice | |
| 42000: Sales and Services | $100.00 | X | RC from Invoice |
Customer Payment with Deposit:
When payment has been made, and deposited the Customer Payment will generate a journal to Debit ledger account 10000: Cash to recognize receipt of the cash, and credit ledger account 12000: Accounts Receivable to relieve the receivable amount.
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 10000: Cash | $100.00 | X | ||
| 12000: Accounts Receivable | $100.00 | X |
Customer Payment with Unapplied Deposit:
In some cases such as credit cards, wires, or ACH the deposit may not be processed at the same time the Customer Payment is done. In these instances you will see two separate journal entries. The customer payment will debit ledger account 12130: Undeposited Payments and Credit ledger account 12000 Accounts Receivable to relieve the receivable.
Customer Payment:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12130: Undeposited Payments | $100.00 | X | ||
| 12000: Accounts Receivable | $100.00 | X |
Once the deposit is completed a second journal entry is generated which debits ledger account 10000: Cash and credits ledger account 12130: Undeposited Payments.
Deposit:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 10000: Cash | $100.00 | X | ||
| 12130: Undeposited Payments | $100.00 | X |
External Systems Accounts Receivable:
When using an approved external system for Accounts Receivable you will need to complete Cost Center Journals for the entries that would otherwise be automatically generated in Workday. The exception would be with customer payments, which are completed with a Cash Sale. Since Cash Sale generates accounting, no journals are needed.
Invoice:
Since you will be creating an invoice outside of Workday, Cost Center Journals will be required to record the outstanding receivables. This will require a debit to ledger account 12015: Accounts Receivable External Systems, and a credit to ledger account 42000: Sales and Services along with the appropriate Revenue Category.
Invoice:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12015: Accounts Receivable External Systems | $100.00 | X | ||
| 42000: Sales and Services | $100.00 | X | Yes |
Invoice with Sales Tax:
Since you will be creating an invoice outside of Workday, Cost Center Journals will be required to record the outstanding receivable and accrued sales tax. This will require a debit for the full amount owed (goods and tax) to ledger account 12015: Accounts Receivable External Systems, and two credit lines. One to ledger account 42000: Sales and Services along with the appropriate Revenue Category, for the amount of the goods or service and the other to ledger account 20500: Accrued Sales Tax for the amount of the tax owed.
Invoice with Sales Tax:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12015: Accounts Receivable External Systems | $107.50 | X | ||
| 20500: Accrued Sales Tax | $7.50 | X | ||
| 42000: Sales and Services | $100.00 | X | Yes |
Invoice with Deferred Revenue:
Deferred Revenue is used when payment/cash will be received prior to the services being rendered, or good delivered to the customer.
Unlike a Workday Customer Invoice, when deferred Revenue is required (i.e. the service is not rendered or goods not delivered to the customer) you would need to complete a series of Cost Center Journals. One journal would be created to book the Accounts Receivable, and the Deferred Revenue. Then one or more journals would be created each time you need to recognize the revenue.
To book your AR and the Deferred Revenue, you will create a journal for the full amount involved to the customer. You will debit ledger account 12015: Accounts Receivable External Systems, and credit ledger account 23000: Deferred Revenue along with the appropriate Revenue Category.
Invoice:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12015: Accounts Receivable External Systems | $1,200.00 | X | ||
| 23000: Deferred Revenue | $1,200.00 | X | Yes |
As revenue needs to be recognized, a cost center journal should be generated to debit ledger account 23000: Deferred Revenue and credit ledger account 42000: Sales and Services along with the Revenue Category you selected on the invoice line.
Revenue Recognition:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 23000: Deferred Revenue | $100.00 | X | Yes | |
| 42000: Sales and Services | $100.00 | X | Yes |
Cash Sale with Deposit:
Since the deposit is done in Workday, there is no need for a Cost Center Journal. As long as the correct Revenue Category is used (RC1721 External AR System Deposit) the Cash Sale will generate the appropriate accounting entries to relieve the receivables and book the cash. Those entries will be a Debit ledger account 10000: Cash to recognize receipt of the cash, and credit ledger account 12015: Accounts Receivable External Systems to relieve the receivable amount.
In most cases the Cash Sale and Deposit are performed at the same time, which would result in the below accounting entries.
Cash Sale:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 10000: Cash | $100.00 | X | ||
| 12015: Accounts Receivable External Systems | $100.00 | X | RC1721 External AR System Deposit |
Cash Sale with Unapplied Deposit:
In some cases the deposit may not be processed at the same time the Cash Sale is done. In these instances you may see two separate journal entries. The first will debit ledger account 12130: Undeposited Payments and Credit ledger account 12015 Accounts Receivable External Systems to relieve the receivable (when using RC1721 External AR System Deposit).
Cash Sale:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12130: Undeposited Payments | $100.00 | X | ||
| 12015: Accounts Receivable External Systems | $100.00 | X | RC1721 External AR System Deposit |
Once the deposit is completed a second journal entry is generated which debits ledger account 10000: Cash and credits ledger account 12130: Undeposited Payments.
Deposit:
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 10000: Cash | $100.00 | X | ||
| 12130: Undeposited Payments | $100.00 | X |
Electronic Payments (i.e CVENT):
One last scenario you may encounter is when using an external system for Accounts Receivable in conjunction with CVENT. External System Advance Payments (RC1744)
Collections and Write-Offs
Since all Collections invoices are handled in Workday regardless of where they were originated Cost Center Journals are not required. This section will outline the various accounting entries that you may see generated in Workday for the collections and write-off scenarios.
Workday Customer Invoice (originating in Workday):
Invoices originating in Workday will automatically transfer to Collections once they are more than 60 days past. No additional accounting entries are generated at this point.
Collections Invoice (originated in third-party system):
Once and invoice that originated in a third-party system becomes more than 60 days past due, it is entered into Workday. When created the collections invoice will generate a journal entry with a debit to ledger account 12000: Accounts Receivable, and a credit to 12015: Accounts Receivable External Systems along with Revenue Category RC1720 Collections Shell which is required to ensure proper accounting entries.
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 12000: Accounts Receivable | $100.00 | X | ||
| 12015: Accounts Receivable External Systems | $100.00 | X | RC1720: Collections Shell |
Customer Payment and Deposit:
Payments associated with invoices in collections generate the same accounting entries as all other Workday Customer Invoices. For details see the Workday Accounts Receivable section.
Write-Off:
When an invoice is written off the Write-Off will generate a journal entry that will debit ledger account 65770: Bad Debt Expense and credit ledger account 12000: Accounts Receivable.
| Ledger Account | Amount | Debit | Credit | Revenue Category |
|---|---|---|---|---|
| 65770: Bad Debt Expense | $100.00 | X | ||
| 12000: Accounts Receivable | $100.00 | X |
Allowance for Doubtful Accounts:
This section provides a high level summary on the accounting entries associated with your Allowance for Doubtful Accounts (i.e. Allowance for Uncollectibles).
Aside from an Write-Off which is initiated by the Bursar’s Office against a Collections Invoice, entries for your Allowance for Doubtful Accounts are done via Cost Center Journal.
Establish/Increase Allowance for Doubtful Accounts:
To establish or increase your Allowance for Doubtful Accounts you will need to enter a Cost Center Journal with a debit to Ledger Account 65770: Bad Debt Expense and Spend Category SC10660 Bad Debt Expense. The offsetting credit will be to Ledger Account 13200: Allowance for Uncollectibles along with the other Worktags for your Earnings Operation.
Establish/Increase:
| Ledger Account | Amount | Debit | Credit | Spend Category |
|---|---|---|---|---|
| 65770: Bad Debt Expense | $100.00 | X | SC10660 Bad Debt Expense | |
| 13200: Allowance for Uncollectibles | $100.00 | X |
Decrease Allowance for Doubtful Accounts:
If you need to decrease your Allowance for Doubtful Accounts you would enter a Cost Center Journal and debit Ledger Account 13200: Allowance for Uncollectibles, and credit Ledger Account 65770: Bad Debt Expense with Spend Category SC10660 Bad Debt Expense and your Earnings Operation’s Worktags.
Decrease:
| Ledger Account | Amount | Debit | Credit | Spend Category |
|---|---|---|---|---|
| 13200: Allowance for Uncollectibles | $100.00 | X | ||
| 65770: Bad Debt Expense | $100.00 | X | SC10660 Bad Debt Expense |