Eighty Eight Stuck Forever

A hotel authorizes $300 at check-in, captures $212 at checkout, then refunds $50. An engineer proposes these ledger postings.

#	event	debit	credit	amount
1	authorize	accounts_receivable	revenue	300.00
2	capture	cash_clearing	accounts_receivable	212.00
3	refund	revenue	cash_clearing	50.00

Every row balances. The auditor rejects it anyway. What is the defect?

Nothing is wrong with the postings. Every row balances, so the ledger is internally consistent and the auditor is objecting to the account names.

Row 1 recognises money on an authorization, which moves no funds and may never be captured, and nothing ever reverses the 88.00 of the hold that was not captured, so accounts_receivable carries a balance that will never clear.

Row 3 debits revenue when it should debit refunds_payable, so the refund understates gross revenue for the period.

Row 2 has the sides reversed. Capturing funds should debit accounts_receivable and credit cash_clearing.