Sales journal

Sales journal (also known as the debtors subsidiary journal) is one of documents of special journals. It is used in an accounting system to record credit sells. A sales journal is used to organize transactions for merchandise sold on store credit.

Entries in Sales Journal

Each entry in sales journal should cointain: date, customer's name, invoice number, the price of the merchandise, the sales tax charged. Entries are posted in the accounts receivable ledger because all of them have an affect on the customer's account. Entries are entered in the journal while the invoice is being prepared. Some companies keep copies of invoices in binders, and these binders are theirs sales journals.

Columns in Sales Journal

Sales journal has seven columns with information about:

• Date of transaction
• Invoice number for the sale
• Costumer Account Debited (name of the customer)
• PR (post reference) - this column is filled at the end of the month, it indicates where transactions will be posted at the end of a month.
• Accounts Receivable Debit - increases to the accounts receivable debit
• Sales tax payable credit - increase in the Sales tax payable general ledger account.
• Sales Credit - increases to the Sales account

With these three last columns each sale can be recorded on one line.

Date	Inv. No.	Costumer Account Debited	PR	Accounts Receivable Debit (in dollars)	Sales Tax Payable Credit (in dollars)	Sales Credit (in dollars)
1/3/19	233	B. Keating		220	20	200
3/3/19	234	G. Smith		330	30	300
6/3/19	235	J. Jones		210	10	200

Each invoice in sales journal has to be precisely recorded in each costumer's account to know who and how much to bill. The bookkeeper must be careful not to mistake the amounts by accident.

Posting from the Sales Journal

Posting sales journal transactions to a general ledger is always done at the end of each month while posting to the subsidiary ledger is done every day.

Posting to the Accounts Receivable Ledger

To post from the sales journal to the accounts receivable ledger:

1. Find the costumer's account in accounts receivable ledger
2. enter the date of a transaction
3. enter invoice number
4. enter the amount in "Debit"
5. enter page number of Sales Journal in PR column
6. enter a checkmark in PR column at sales journal

Posting to the General Ledger

We have to post post totals of Accounts Receivable Debit, Sales Tax Payable Credit and Sales Credit from sales journal to general ledger. In the sales account in general ledger:

1. enter the date of the last transaction
2. enter the total of a Sales Credit column
3. enter page number of Sales Journal in PR column
4. calculate and write the new account balance in the Balance Debit or Credit column
5. write the general ledger number in the sales journal

Examples of Sales journal

• A retail store selling clothes and accessories, such as shoes and hats, has a sales journal to track all purchases made with store credit. The sales journal records the customer’s name, the date of sale, the item purchased, the amount of credit extended and any discounts applied.
• A restaurant has a sales journal to track the credit purchases made by customers. In the sales journal, the restaurant records the customer’s name, the date of sale, the items purchased, the amount of credit extended and any discounts applied.
• A car dealership has a sales journal to track all purchases made with store credit. The sales journal records the customer’s name, the date of sale, the car purchased, the amount of credit extended and any discounts applied.
• An online store has a sales journal to track all purchases made with store credit. The sales journal records the customer’s name, the date of sale, the items purchased, the amount of credit extended and any discounts applied.

Advantages of Sales journal

Sales journal is an important tool for recording and tracking credit sales, which has many advantages. The benefits are as follows:

• It makes it easier to record credit sales in one place and track them. This helps to reduce the risk of errors, as all sales information is stored in one place.
• It can be used to analyze sales trends and identify areas of improvement. By tracking sales information over time, businesses can gain insights into the effectiveness of their marketing and sales strategies.
• It allows businesses to monitor customer payments and ensure timely collection of receivables. By keeping track of customer payments, businesses can identify delinquent accounts and take corrective action.
• It helps businesses to identify customers who may be having difficulty paying their bills. By keeping track of customer payments, businesses can identify struggling customers and provide them with assistance.
• It helps to reduce paperwork and improve accuracy by streamlining the process of recording and tracking sales information. By recording sales information in a single place, businesses can reduce the amount of paperwork and improve accuracy.

Limitations of Sales journal

A sales journal is a helpful tool to record and organize transactions related to sales on store credit, but there are a few limitations to keep in mind when using this journal:

• Sales journal only records transactions related to sales on store credit, not cash sales.
• Sales journal can only record a limited amount of information, such as customer name, date, and amount of sale.
• Sales journal does not track invoices, payments, or other details related to the sale.
• Sales journal does not automatically update the general ledger or other accounts, but the entries must be manually entered.
• Sales journal does not track inventory levels, so it cannot be used to monitor stock levels.

Other approaches related to Sales journal

One other approach related to Sales journal is the use of sales journals in an accounting system. These journals are used to record all transactions related to the sale of merchandise on store credit. The main elements of a sales journal include:

• Sales invoice number - this number is used to track the sale and is usually printed on the customer's invoice.
• Date of sale - the date of the sale is used to keep track of when the sale occurred.
• Name of customer - the customer's name is used to identify who purchased the goods.
• Description of items purchased - this provides a detailed record of the items that were purchased.
• Amount of sale - this is the amount of the sale including taxes, shipping, and other charges.
• Payment terms - this outlines the payment terms of the sale such as when the payment is due and what forms of payment are accepted.

In summary, the Sales journal is a special journal used to record all transactions related to the sale of merchandise on store credit. It includes elements such as the sales invoice number, date of sale, name of customer, description of items purchased, amount of sale, and payment terms.

Sales journal — recommended articles

Purchase ledger — Sales ledger — Book of original entry — Books of original entry — Purchases journal — Purchase returns and allowances — Subsidiary account — Nominal ledger — Purchase invoice

References

• Epstein L. (2014) Bookkeeping for Dummies 2nd edition, John Wiley $ Sons
• Epstein L. (2009) Wiley Pathways Small Business Accounting, John Wiley & Sons, Inc.
• Gilbertson C.B., Lehman M.W., Gentene D. (2010) Century 21 Accounting: Multicolumn Journal, Introductory Course, Chapters 1-17, South-Western Cengage Learning
• Weil S.H., Noi S.A.(2001) Introductory Accounting Skills: For Financial and Management Accounting Students Juta Education (Pty) Ltd

Author: Emilia Zapart