# Journal entry for unapplied customer cash

> Debit Cash and credit Accounts receivable for the customer, unapplied, on the day the money arrives. When the invoices it pays are identified, apply it to them; the entry is already made, so only the subledger changes. Never credit revenue.

Source: https://lopifi.com/journal-entries/unapplied-cash
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

---

- **Received:** $5,000
- **Invoices it pays:** INV-1006 and INV-1007
- **Entity:** Illustrative company
- **Basis:** Accrual
- **Currency:** USD
- **Period:** November – December 2026

## The worked example

On November 30, 2026 a customer with 3 open invoices sends $5,000 and no remittance advice. The receipt is booked against the customer as unapplied cash. The next morning a subset search finds the only combination of its invoices that sums to it exactly, INV-1006 and INV-1007, and the customer confirms.

### JE-1 · Transaction · November 30, 2026

Book the receipt against the customer, unapplied.

| Account | Debit | Credit |
| --- | ---: | ---: |
| 1000 Cash | $5,000.00 |  |
| 1100 Accounts receivable |  | $5,000.00 |
| Total | $5,000.00 | $5,000.00 |

## What the entries do to the accounts

Every entry above posted to the ledger, starting from zero balances: the net debit or credit each account is left with. Debits equal credits, so the books still balance.

| Account | Debit | Credit |
| --- | ---: | ---: |
| 1000 Cash | $5,000.00 |  |
| 1100 Accounts receivable |  | $5,000.00 |
| Totals | $5,000.00 | $5,000.00 |

## Why it is booked this way

The money is the customer's payment for something they owe, so it reduces their receivable the day it lands, even before anyone knows which invoice. The control account is right at once; only the subledger waits.

Matching it is a search, not a guess: which of the payer's open invoices add up to exactly what arrived. A unique exact match is strong evidence, and the customer's confirmation is the proof.

## Common mistakes

- Crediting revenue or a suspense account because the invoice is unknown.
- Applying one customer's payment to another customer's oldest invoices.
- Leaving it unapplied past month end, so the aging overstates what is past due.

## Questions

### Is unapplied cash revenue?

No. It reduces what that customer owes. Only if it leaves the customer with a net credit balance at period end is it reclassified to a liability.

### How do I find which invoices a lump sum paid?

Search the payer's open invoices for a combination that adds up to the payment exactly, then confirm it with the customer before relying on it.

## Terms on this page

- [Unapplied cash](https://lopifi.com/md/glossary/unapplied-cash): Customer cash received but not yet assigned to an invoice. It reduces that customer's AR; only a net credit balance is reclassified to a liability at period end
- [Application](https://lopifi.com/md/glossary/application): Assigning received cash to specific invoices
- [Remittance advice](https://lopifi.com/md/glossary/remittance-advice): The payer's note of which invoices a payment covers and of any deduction taken — the first thing cash application reads
- [Subledger](https://lopifi.com/md/glossary/subledger): The detail, by customer, vendor or asset, whose total must equal its control account in the GL
- [Control account](https://lopifi.com/md/glossary/control-account): A GL account whose balance is the total of a subledger — AR, AP, fixed assets — and is posted only from it

## Work with this entry

- [Which invoices make this deposit?](https://lopifi.com/md/tools/subset): Find which open items add up to a deposit, to the cent.
- [Accounts receivable, explained for founders](https://lopifi.com/md/accounting/accounts-receivable): Money customers owe you for work you've delivered and invoiced but haven't been paid for yet. It's an asset.
- [Journal entry for a customer short payment](https://lopifi.com/md/journal-entries/short-payment): Debit Cash for what arrived and credit Accounts receivable for the same amount. If the deduction is agreed, issue a credit note: debit Sales returns and allowances, credit Accounts receivable. If it is not, leave the difference open on the invoice, marked disputed.
- [Journal entry for a sale on account](https://lopifi.com/md/journal-entries/sale-on-account): For a sale on credit, debit Accounts receivable and credit Revenue for the price; under a perpetual inventory system also debit Cost of goods sold and credit Inventory for what the goods cost. When the customer pays, debit Cash and credit Accounts receivable.
- [Journal entry for a Stripe payout](https://lopifi.com/md/journal-entries/stripe-payout): Book charges gross: debit Stripe clearing and credit Revenue for every charge, and debit Sales returns and allowances and credit Stripe clearing for refunds. When the payout lands, debit Cash for the payout and Merchant fees for the fees, and credit Stripe clearing, which should then be zero.

*An illustrative company, not anyone’s real books. Every figure on this page is computed from the inputs in the example and posted by the same functions as the [journal entry balancer](https://lopifi.com/md/tools/journal). General information, not tax, legal or accounting advice. Check with a CPA before you act on it.*