Journal Entry for Cash Collection from Debtors:

Explanation:
1. Identify the Transaction: When a business collects cash from its debtors, it is a financial transaction that needs to be recorded in the books of accounts.
2. Debit Accounts Receivable: The first step is to debit the Accounts Receivable account to reduce the amount owed by the debtor. This entry reflects the decrease in the amount receivable from the debtor.
3. Credit Cash/Bank Account: The next step is to credit the Cash or Bank account to record the inflow of cash into the business. This entry reflects the increase in the cash balance of the business.
4. Update the General Ledger: After making the journal entry, the Accounts Receivable and Cash/Bank accounts in the general ledger need to be updated to reflect the changes in the financial position of the business.
5. Reconcile Accounts: It is important to reconcile the Accounts Receivable subsidiary ledger with the general ledger to ensure that all transactions are accurately recorded and accounted for.
6. Impact on Financial Statements: The cash collection from debtors will have an impact on the balance sheet by reducing the Accounts Receivable balance and increasing the cash balance. It will also affect the income statement by increasing the cash inflow from operating activities.
7. Importance of Timely Recording: It is crucial to record cash collections from debtors promptly to maintain accurate financial records and ensure proper management of cash flow.
By following these steps and principles, businesses can effectively record and manage cash collections from debtors in their accounting system.