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Sales Journal:

Definition and Explanation:

When a business supplies goods to a customer, an invoice is made out. The top copy is sent to the purchaser who records it in his purchase journal. The delivery of the goods will new take place, but meanwhile the seller who made out the invoice has to record the transaction in his book. The book in which he records the transactions is called "sales journal". Sales journal is also called sales book. The second copy of the invoice, which is retained by the seller, will be entered into his book of original entry.

There are so many customers to whom goods are sold in a day. So every day a bundle of invoices made out by the invoice department of the seller, whose top copies have already been sent to the purchasers, will be given to the sales journal clerk, who will enter them in the sales journal.

The ruling of the sales journal is exactly the same as the purchase journal, and is illustrated below:

Suppose, on 20.1.2005, we sold to W & Co. 10 cartons of soap @ $300 per carton. We made out an invoice and sent the top copy of the invoice to W & Co. The second copy of the invoice is retained by us. This transaction is recorded in the sales journal on the basis of this copy. The sales book will be as follows:

Sales Journal

Date Description Invoice No. L/F Details $ Amount $

20.1.2005

W & Co.
10 cartons of soap @ $300 per carton
Less trade discount

262

DL16

3000
Nil


3,000
------------
3000

Explanation:

The difference columns of sales journal or sales book are explained as follows:

  1. Date: The date of the sales goods is written in this column.

  2. Description: The name the person or business to whom goods are sold, details of goods sold etc. are written in this column.

  3. Invoice No: The serial No. of the invoice (262) is written in this column.

  4. Ledger Folio: When goods are sold to a customer, his account is opened in debtor's ledger (DL denotes debtor's ledger) in the name of the customer. The page No. (16) of the ledger where the account has been opened is written in this column.

  5. Details: This column shows how the net price of goods is ascertained after deducting trade discount (if allowed).

  6. Amount: The net price of the goods is written in this column.

Example:

Enter the following transactions into sales journal:

  1. June 4, 2005,  sold on credit to O:
    10 tables @ $150
    30 chairs @ $100

  2. June 11, 2005, sold on credit to S:
    1 dining table @@ $1,500

  3. June 30, 2005, sold on credit T restaurant:
    100 chairs @ $150
    20 tables @ $200

  4. The trader offers trade discount at the following rates:
    Sales up to $2000 - 5%
    Sales beyond $2000 - 10%

Sales Journal (Book) Folio (Page 12)

Date Description Invoice No. L/F Details $ Amount $

4.6.2005

O.
10 tables @ $150
30 chairs @ $100


Less 10% trade discount
135
 
DL-15
1500
3000
---------
4500
450
---------





4050
11.6.2005 S.
1 dining table @ $1500
Less 5% trade discount
136 DL-17
1500
75
---------


1425
30.6.2005 T restaurant.
100 chairs @ $150
20 tables @ $200


Less 10% trade discount
137 DL-19
15000
4000
---------
19000
1900
---------





17100
30.6.2005 Sales account                       Cr.   GL-30   22575

Ledger

S A/C (Folio 17)

11.6.2005
Sales A/C         1425
 

 O A/C (Folio 15)

4.6.2005
Sales A/C          4050
 
 

T Restaurant A/C (Folio 19)

30.6.2005
Sales A/C         17,100
 

Sales A/C (Folio 30)

  30.6.2005
Sundry Debtors A/C  22575

It must be noted that sales account has not been credited thrice on three different dates. Instead, it has been credited with the total amount of the three sales aggregating $22575 (4050 + 1425 + 17100) at a time at the end of the month. The three other accounts (O, S and T Restaurants) are debited individually.

You should note that the double entry is perfect. We have debited three accounts separately which totaled $22,575, the exact amount is credited to sales account collectively.

Relevant Articles:

What is Subdivision of journal
Purchases Journal
Sales Journal
Purchases Returns Journal
Sales Returns Journal
Special Journal Quiz

 

 

 

 

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Financial Accounting Topics


  Introduction to Accounting
 ----------------------------------------------------------------------------
  Transactions and Accounting Equation
----------------------------------------------------------------------------
  Analysis of Business Transactions
----------------------------------------------------------------------------
  Journal, Ledger and Trial Balance
----------------------------------------------------------------------------
  Accounting for Bills of Exchange
----------------------------------------------------------------------------
  Special Journals
----------------------------------------------------------------------------
  Cash Book
----------------------------------------------------------------------------
Bank Reconciliation Statement
----------------------------------------------------------------------------
  Final Accounts
----------------------------------------------------------------------------
  Work Sheet
----------------------------------------------------------------------------
  Capital and Revenue Items
----------------------------------------------------------------------------
  Valuation of Inventories
----------------------------------------------------------------------------
  Accounts of Non-profit Making Organizations
----------------------------------------------------------------------------
  Statement of Cash Flows
----------------------------------------------------------------------------
  Accounting Ratios Analysis
----------------------------------------------------------------------------
  Depreciation, Provisions and Reserves
----------------------------------------------------------------------------
  Accounting Dictionary
----------------------------------------------------------------------------
  Financial Calculators
 
 
 
Managerial Accounting Topics

  Financial Statements
----------------------------------------------------------------------------
  Cost Volume Profit Relationship
----------------------------------------------------------------------------
  Variable Costing System
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  Materials and Inventory Cost Control
----------------------------------------------------------------------------
  Activity Based Costing System
----------------------------------------------------------------------------
  Standard Costing and Variance Analysis
----------------------------------------------------------------------------
  Balanced Scorecard
----------------------------------------------------------------------------
  Capital Investment Analysis/Capital Budgeting
 
 

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