General Ledger Posting ~ Customer Invoice

Lets say that you sold a range to a customer for $500.00 and your cost was $400. Sales Tax is 10% which calculates to $50.00.
                                                        Debit                Credit
Accounts Receivable Acct            $550.00
Inventory Acct                                                        $400.00
Sales Tax Payable Acct                                            $50.00
Sales Income Acct                                                  $500.00
Cost of Goods Sold Acct             $400.00

When you take a customer payment and verify the payment Accounts Receivable will have a Credit Balance (see General Ledger Posting ~ Customer Payment). The posting of a Customers Invoice will enter a Debit Balance therefore taking the Accounts Receivable Account to Zero. If you allow a customer to have an account then when you Invoice this customer your Accounts Receivable with be valued with a Debit Amount. When you receive a payment from them then Accounts Receivables will be Credited therefore the account will be at zero.