At the end of the month, the amount column in the journal is totaled. This total is then posted as a debit in the accounts receivable control account and as a credit to the general ledger sales account. At the end of each reporting period, the sum total of the unposted debits and credits in a sales journal is posted to the general ledger. Like in a cash sales journal entry, you likely also will deal with sales tax. 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. The following example illustrates how transactions are recorded in a sales journal and how entries from there are posted to subsidiary and general ledgers.
How Do You Record a Journal Entry for Sales?
Your Accounts Receivable total should equal the sum of your Sales Tax Payable and Revenue accounts. When you offer credit to customers, they receive something without paying for it immediately. Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.
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Your end debit balance should equal your end credit balance. As a refresher, debits and credits affect accounts in different ways. Entries from the sales journal are posted to the Accounts Receivable subsidiary ledger and General Ledger. Just like the purchases journal, only credit sales are recorded when preparing a sales journal. On the other hand, assets sold in cash are recorded in the cash book and the sales of assets on credit are recorded in the proper journal. 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.
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Here’s how Little Electrode, Inc. would record this sales journal entry. To create the sales journal entry, debit your Accounts Receivable account for $240 and credit your Revenue account for $240. All the sales on account for June are shown in this journal; cash sales are recorded in the cash receipts journal.
Even for a firm with only several hundred sales a month, using a sales journal can save considerable time. In turn, the individual entries in the sales journal sales journal are posted to the respective accounts in the accounts receivable subsidiary ledger. It empowers employees, boosts sales, and enhances customer satisfaction.
Special Journals
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- Later, when the customer does pay, you can reverse the entry and decrease your Accounts Receivable account and increase your Cash account.
- These companies would keep multiple sales journals to track the sales of each product.
- In practice, each line item would include the information listed above.
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