HR Jetpack

Accounts Receivable

This video is premium content

Register or sign in to gain access.

Lesson:

Accounts Receivable

Lesson Content

It is Day four of our Lemonade Stand business.

To create a map of transactions for Days 4, 5 and 6 of the Lemonade Stand, please create a similar layout in your notepad or take screen shot of this screen and print it out.

It is a three day weekend. To save time on trips to the store, we will buy supplies for all three days. These supplies will be in our inventory. First, let’s check the weather forecast.

There is a 10% chance of rain on Day 1, lots of sunshine on Day 2 and 20% chance of rain on Day 3. What’s more? A baseball game is scheduled for Day 3.

We are at the grocery store. The cost of supplies to make 1 cup of lemonade is $.40.

Based on the weather forecast and planned baseball game, we decide to buy supplies for 90 cups of lemonade. We pay $36 in cash.

How does this impact our financials?

When we buy supplies to store in our inventory, one side of the transaction is, cash is decreased, the other side of the transaction is, inventory is increased.

Let’s see how this transaction maps on the financial statements. This is our income statement and the balance sheet. $83 under cash is our cash balance at the end of Day 3. $30 under owner’s investment is our initial investment, and $53 is our total profit since we started selling lemonade. When we buy supplies, negative $36 is recorded under cash reflecting decrease in cash and positive $36 is reflected under inventory, reflecting increase in inventory.

We made 20 cups of lemonade for Day 1. How many cups did we sell on Day 1? Our demand was also 20 cups. We sold everything we made.

Our price was $1 per cup. We sold 20 cups for a total of $20 in cash. How does this impact our financials?

When we sell lemonade, cash is increased and sales are increased. These are the two sides of this transaction. Since we used supplies from our inventory to make and sell lemonade, we need to reduce our inventory and reflect the cost of those supplies as an expense. Generally, cost to produce products we sell is reflected under Cost of Goods Sold, and cost of services we sell is reflected under Cost of Sale. Let’s now refer to the cost of making our lemonade as Cost of Goods Sold.

To reduce our inventory by the cost of supplies we used to make lemonade we sold and reflect it as Cost of Goods Sold, one side of the transaction is, inventory is decreased, the other side of the transaction is, cost of goods sold is increased. These are the other two sides of this transaction. Each transaction can have more then one account on each side. Totals of each side have to equal.

Let’s look how this works with our numbers. Inventory is decreased by $8. Cost of Goods Sold is increased by $8.

This is our Income Statement and the Balance sheet. When we sell lemonade, $20 is recorded under sales reflecting increase in sales, and $20 is recorded under cash reflecting increase in cash. Negative $8 is recorded under inventory reflecting decrease in inventory for the supplies we used to make lemonade we sold and $8 is recorded under Cost of Goods Sold reflecting the cost of the supplies we used to make lemonade we sold.

What if our customers would like to buy some lemonade and don’t have any cash? If we sell lemonade with a promise from the customer to pay later, it is called selling on credit. If we use accrual method of accounting, we recognize sales at the time of sale. If we use cash method of accounting, we recognize sales when we receive cash.

Most organizations use accrual method of accounting. For the purposes of this course, we will use accrual method of accounting. All we need to know is that when customers do not pay us at the time of sale, we reflect it under accounts receivable. In our example of selling lemonade on credit, the two side of the transaction are: Sales are increased and Accounts Receivable are increased. Accounts Receivable reflect amounts our customers owe us for the products and services they purchased from us if they did not pay for them at the time of purchase.

Anna Samorukova

Instructor:

Anna Samorukova

Anna designs and delivers learning and change facilitation experiences that speak to the learner and inspire people and organization reach for potential and create an impact with. She applies engaging,...

Anna's Full Bio

HR Courses

Human Resources Training Programs

Self-paced HR Courses

The following HR courses are self-paced (asynchronous), and qualify for both SHRM and HRCI recertification credits. These courses are included in the HR Recertification Subscription.

Effective Disciplinary Action Policies and Procedures

Duration: 1 hr 1 min
SHRM: 1.0 PDC
HRCI: 1.0 General

Liz LaForte

Liz LaForte

RFP Process for HR

Duration: 1 hr 19 mins
SHRM: 1.25 PDC
HRCI: 1.25 General

Mark Fogel

Mark Fogel

Organizational Ethics for HR Managers

Duration: 1 hr 30 mins
SHRM: 1.5 PDC
HRCI: 1.5 General

Dawn Tedesco

Dawn Tedesco

HR as a Business Partner

Duration: 1 hr 5 min
SHRM: 1.0 PDC
HRCI: 1.0 Business

Scott Pitts

Scott Pitts

Blockchain for HR

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Michael Wilson

Michael Wilson

HR Strategic Planning

Duration: 1 hr 2 mins
SHRM: 1.0 PDC
HRCI: 1.0 Business

Hayley Buonopane

Hayley Buonopane

Employee Engagement & Retention

Duration: 1 hr 4 mins
SHRM: 1.0 PDC
HRCI: 1.0 General

Hayley Buonopane

Hayley Buonopane

HR Metrics That Matter

Duration: 1 hr 16 mins
SHRM: 1.25 PDC
HRCI: 1.25 Business

Christina Danforth

Christina Danforth

Finance for Absolute Beginners

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Anna Samorukova

Anna Samorukova

Change Management 101

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Hayley Buonopane

Hayley Buonopane

Labor Relations

Duration: 1 hr 42 mins
SHRM: 1.50 PDC
HRCI: 1.75 General

Matthew Kerzner

Matthew Kerzner

Diversity and Inclusion

Duration: 1 hr 25 mins
SHRM: 1.25 PDC
HRCI: 1.50 General

Christina Danforth

Christina Danforth

HR Analytics

Duration: 1 hr 31 mins
SHRM: 1.50 PDC
HRCI: 1.50 Business

Christina Danforth

Christina Danforth

Performance Management: Development & Deployment

Duration: 1 hr 18 mins
SHRM: 1.25 PDC
HRCI: 1.25 General

Christina Danforth

Christina Danforth

The Role Assessments Play in Talent Management

Duration: 2 hr 5 mins
SHRM: 2.0 PDC
HRCI: 2.0 General

Craig Haas

Craig Haas

AI for HR

Duration: 1 hr 3 mins
SHRM: 1.0 PDC
HRCI: 1.0 General

Michael Wilson

Michael Wilson

Compensation 101

Duration: 1 hr 8 mins
SHRM: 1.0 PDC
HRCI: 1.25 General

Pamela Sande

Pamela Sande

Effective Leadership Communications for HR Professionals

Duration: 2 hr 30 mins
SHRM: 2.5 PDC
HRCI: 2.5 General

Christina Danforth

Christina Danforth

Recruiting Strategies to Hire the Best Candidate

Duration: 1 hr 6 mins
SHRM: 1.0 PDC
HRCI: 1.0 General

Lois Krause

Lois Krause

Cybersecurity 101 for HR Pros

Duration: 1 hr 2 mins
SHRM: 1.0 PDC
HRCI: 1.0 General

Michael Wilson

Michael Wilson

EQ Competence: Fostering a Talent Advantage that Drives Organizational Performance

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Craig Haas

Craig Haas

Thinking Lean

Duration: 1 hr 8 mins
SHRM: 1.0 PDC
HRCI: 1.25 Business

Christina Danforth

Christina Danforth

Coaching for HR Professionals

Duration: 1 hr 2 mins
SHRM: 1.0 PDC
HRCI: 1.0 General

Stacey Zackin

Stacey Zackin

The Employment Cycle

Duration: 1 hr 45 mins
SHRM: 1.75 PDC
HRCI: 1.75 General

Christina Danforth

Christina Danforth

Behavioral and Situational Interviewing

Duration: 1 hr 8 mins
SHRM: 1.0 PDC
HRCI: 1.25 General

Stephanie Legatos

Stephanie Legatos

Dynamic Dialogues

Duration: 1 hr 10 mins
SHRM: 1.0 PDC
HRCI: 1.25 General

Stacey Zackin

Stacey Zackin

Employment Law 101

Duration: 3 hr 11 mins
SHRM: 3.0 PDC
HRCI: 3.25 General

Mark Addington

Mark Addington

Thrown to the Wolves: Preparing Your New Leaders to Lead the Pack

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Karen Hinds

Karen Hinds

Introduction to Organizational Development

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Hayley Buonopane

Hayley Buonopane

Practical Meeting Preparation: Getting Ready for a Productive Meeting

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christine Gatti

Christine Gatti

Succession Planning: Build Your Bench

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Hayley Buonopane

Hayley Buonopane

Practices for Hiring Successfully

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Hayley Buonopane

Hayley Buonopane

Team Development: Building Collaboration & Effectiveness

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christine Gatti

Christine Gatti

Leading and Managing the Need for Both

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Hayley Buonopane

Hayley Buonopane

Coaching: Guiding the Management Team

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Hayley Buonopane

Hayley Buonopane

Being A Change Agent

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Hayley Buonopane

Hayley Buonopane

Leading a Multigenerational Team

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Karen Hinds

Karen Hinds

Multi-Generational Workforce: Problem or Competitive Advantage?

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christine Gatti

Christine Gatti

Virtual Reality: The Future of HR

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christina Danforth

Christina Danforth

Unconscious Bias: Impact on Recruitment and Retention

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christina Danforth

Christina Danforth

Business Fundamentals for HR Pros

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Jack Antonich

Jack Antonich

Influence and Communications as an HR Pro

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Stacey Zackin

Stacey Zackin

Value Based Decision Making for HR Pros

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Stacey Zackin

Stacey Zackin

Strategic Planning to Support HR Initiatives

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Dr. Deborah Osgood

Dr. Deborah Osgood

Meet in the Middle: Best Methods for Conflict Management

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christine Gatti

Christine Gatti

Economics for HR Professionals

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Jack Antonich

Jack Antonich

Business Plans: Why HR Pros Should Care

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Jack Antonich

Jack Antonich

Emotional Intelligence: What is it and Why Does it Matter

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christine Gatti

Christine Gatti

Marketing/Selling Continuum (From Idea to Revenue)

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Jack Antonich

Jack Antonich

Diversity Equity & Inclusion The Lens We Wear

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Stacey Zackin

Stacey Zackin

Welcome! What HR can Learn from the Field of Hospitality

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Stacey Zackin

Stacey Zackin

Accounting and Financial Reporting for HR Pros

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Jack Antonich

Jack Antonich

How HR Can Establish & Influence a Culture Of Hospitality

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Stacey Zackin

Stacey Zackin

Raising Capital (Who, What, When, Where, Why & How)

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 Business

Jack Antonich

Jack Antonich

Cultural Competence: Fostering Diversity Equity & Inclusion

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Stacey Zackin

Stacey Zackin

DiSC Communication Styles: What are They & How They can Help You

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christine Gatti

Christine Gatti

Effective Meeting Facilitation for HR Pros

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christine Gatti

Christine Gatti

Best Practices in Providing Effective Performance Feedback

Duration: 1 hr
SHRM: 1.0 PDC
HRCI: 1.0 General

Christine Gatti

Christine Gatti