A company receives payment from one of its customers on August 5 for services performed on July 21. Which of the following entries would be recorded if the company uses accrual basis accounting?

Cash (or Banks) Debit

Accounts Receivables Credit

Explanation:

According to accrual basis accounting, the Sale was recorded in July, as follows:

Accounts Receivables Debit

Sales Credit

So, in August the company must book:

Cash (or Banks) Debit

Accounts Receivables Credit

In this way, AR balance = zero (no pending credit to be collected)