Fundamentals
of Accountancy,
Business, and
Management
Sales Journal
Sales Journal
A sales journal—sometimes called a sales book or
sales day book—is a specialized accounting record
used to track all credit sales of goods or services,
meaning transactions where payment is not made right
away. It serves as a chronological record of these sales,
with entries posted to both the accounts receivable
account of customers and the sales revenue account.
Meanwhile, cash sales are not included here; they are
entered in a separate cash receipts journal.
Purpose
• Tracks credit sales: It serves as the primary record
for sales made on account.
• Simplifies recording: It uses a simplified format to
record credit sales, avoiding separate debit and credit
entries for each transaction.
• Facilitates financial reporting: It provides organized
data for accurate revenue recognition on income
statements and for monitoring outstanding customer
balances.
Format A typical sales journal
includes columns for:
• Date of the transaction
• Customer's name (the debtor)
• Invoice number
• Amount of the sale (debit to Accounts
Receivable and credit to Sales)
• (In some systems) Cost of Goods Sold and
Inventory
Explanation of columns
• Date: This column is used to record the date on
which the sale is made. Normally, it is the same date
as written on the sales invoice
• Account debited: This column is used to enter the
name of customers whose individual accounts are
maintained in the accounts receivable subsidiary
ledger.
• Invoice number: The sales invoice number is written
in this column.
Explanation of columns
• Post reference (PR): The entries in the sales journal are posted to
relevant accounts in the receivables subsidiary ledger on a daily basis.
The post reference is used to enter the account numbers of individual
accounts in the subsidiary ledger to which the entries are posted.
• Accounts receivable & Sales: In this column, the net amount receivable
from customers is written. In the general ledger, the accounts receivable
account is debited and the sales account is credited by the total of this
column.
• Cost of goods sold & inventory: In this column, the cost price of the
merchandise sold is entered. In the general ledger, the cost of goods sold
account is debited, and the inventory account is credited by the total of
this column.
Posting entries from sales journal to
subsidiary and general ledger
The entries in the sales journal must be posted to the
subsidiary and general ledger. This posting procedure is
briefly explained below:
(1). Posting to accounts receivable subsidiary ledger:
At the end of each day (or immediately after the
transaction has been performed), the individual entries
are debited to appropriate accounts in the accounts
receivable subsidiary ledger.
Posting entries from sales journal to
subsidiary and general ledger
(2). Posting to general ledger:
At the end of each month or another appropriate period, totals of the columns of the
sales journal are posted to the relevant general ledger accounts as follows:
1. The total of accounts receivable & sales columns is debited to the accounts receivable
account and credited to the sales account in the general ledger.
2. The total of the cost of goods sold & inventory column is debited to the cost of goods
sold account and credited to the inventory account in the general ledger.
To indicate that the posting from the sales journal to the general ledger has been made,
the numbers of the general ledger accounts are mentioned in parentheses below the
totals of the relevant columns of the sales journal.
Example
The following example illustrates how
transactions are recorded in a sales journal
and how entries from there are posted to
subsidiary and general ledgers.
Recording entries in sales journal
how to entry sales journal?
To make a sales journal entry, debit the asset account
(Cash or Accounts Receivable) for the sale amount
and credit the Sales Revenue account for the same
amount. If it's a credit sale, also debit the Cost of
Goods Sold and credit the Inventory account to
reflect the cost of the sold goods. Include details like
the date, invoice number, customer name, and
relevant sales amounts in the sales journal.
Here's a step-by-step guide to making a sales journal entry for a sale on
credit:
1. Record the sale in the sales journal
. The sales journal includes columns for:
Date: The date the sale was made.
Customer Name/Account: The name of the customer who made the
purchase.
Invoice Number: The unique number from the sales invoice.
Accounts Receivable: The total amount the customer owes.
Sales Revenue: The total revenue from the sale.
Cost of Goods Sold (COGS): The cost the business paid for the item sold.
Inventory: The cost of the inventory removed.
Sales Tax Payable (if applicable): The amount of sales tax to be paid to
the tax
2. Create the first journal entry for the sale
.
Debit: the Accounts Receivable account for the full
amount of the sale (the price the customer will
pay). This increases the company's asset, showing the
money is owed.
Credit: the Sales Revenue account for the same
amount. This records the income earned from the
sale.
3. Create the second journal entry for
the cost of goods sold
.
Debit: the Cost of Goods Sold (COGS)
account for the cost of the item sold.
Credit: the Inventory account for the
same amount. This reflects the reduction
in your business's inventory.
4. Record sales tax if applicable
.
If your sale includes sales tax, credit
the Sales Tax Payable account for
the amount of the sales tax. This
creates a liability that the company
will pay to the government.
5. Post the journal entry to the
general ledger
. After making the entries in the
sales journal, post them to the
appropriate accounts in your
accounting system to keep your
records accurate and up-to-date.
The end
Members; ANORA, FELIAS, AKLAN,
CAMUS