These additional accounts include cost of goods sold and inventory. If your customer uses a credit card to buy the item, you’ll debit accounts receivable instead of cash since it’s income that you’re owed, but you haven’t been paid yet. That’s because the customer pays you the sales tax, but you don’t keep that amount. Instead, you collect sales tax at the time of purchase, and you make payments to the government quarterly or monthly, depending on your state and local rules. Let’s review what you need to know about making a sales journal entry. Similarly, purchase journals are used to record the purchases of a company.
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The transaction number, account number, customer name, invoice number, and sales amount are typically stored in the sales journal for each sale transaction. When a transaction is recorded, the accounts receivable account is debited, while the sales account is credited. A Sales Journal, also known as the Sales Day Book, is a specialized accounting journal used to record all credit sales of merchandise. In turn, the individual entries in the sales journal are posted to the respective accounts in the accounts receivable subsidiary ledger. When recording sales, you’ll make journal entries using cash, accounts receivable, revenue from sales, cost of goods sold, inventory, and sales tax payable accounts. A sales journal entry is a bookkeeping record of any sale made to a customer.
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Posting from the Sales Journal
Account receivables are mentioned when the client purchases a product or service on credit, and sales are mentioned when the client purchases a product or service and pays for it through cash. There are two sides to every accounting book; it is the same for a sales journal. The sale of the LED light would bring 100 Dollars to the company. This cash would be noted on the credit side, whereas the LED light would be noted on the Debit side.
Little Electrode, Inc. purchased this monitor from the manufacturer for $750 three months ago. Here’s how Little Electrode, Inc. would record this sales journal entry. As the business maintains control accounts in the general ledger, the accounts receivable ledger itself is not part of the double entry bookkeeping, it is simply a record of the amounts owed to each customer. It is also clear from the name that sales journal records sale transactions, whereas purchase journals record purchase transactions. A sales tax payable account is opened in the general ledger, and the total of the sales tax payable column is credited to that account at the end of each month or another appropriate period.
If you have already read the “purchases journal” article, you may have noticed that the sales invoice and purchase invoice are two different names given to the same document. It is always prepared by the seller and is called the sales invoice in the record of the seller and the purchase invoice in the record of the buyer. The seller uses it to record a sales transaction in his sales journal, and the buyer uses it to record a purchase transaction in his purchases journal. And the accounts receivable subsidiary ledger for Baker Co. would also show the payment had been posted (Figure 7.22). The information in the sales journal was taken from a copy of the sales invoice, which is the source document representing the sale.
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- If a company had many transactions, that meant many journal entries to be recorded in the general journal.
- This is done to avoid the chances of fraud to avoid any unnecessary losses.
- Your credit sales journal entry should debit your Accounts Receivable account, which is the amount the customer has charged to their credit.
Making a cash sales journal entry
