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In this video tutorial, the cash receipts journal is explained as a tool for managing all incoming cash for a business. An example transaction illustrates the process: John Henry, a regular customer, pays $500 towards his accounts receivable. The entry starts with the date, followed by crediting the individual accounts receivable account for John. An explanation referencing the invoice being paid is included, and if the invoice number is available, it is noted. John receives a 10% discount of $50, which is recorded in the sales discount column. Consequently, $450 is entered in the cash debit column, and the full purchase amount remains in the accounts receivable credit column.
