If you prepare your financial statements using the accrual method, but maintain your books on a daily basis using the cash method, you normally do not make entries to your accounts receivable general ledger account during the accounting period. At the end of your accounting period, you need to make an adjusting entry in your general journal to bring your accounts receivable balance up-to-date.
|To clear out 1/1/2001 accounts receivable balance|
|Reserve for income tax||16,500|
|To set up 12/31/2001 accounts receivable balance|