What is a Sales Journal? Definition Meaning Example
A notation would be made in the reference column to indicate the payment had been posted to Baker Co.’s accounts receivable subsidiary ledger. After Baker https://www.bookstime.com/articles/deferred-revenue Co.’s payment, the cash receipts journal would appear as in Figure 7.21. The use of a reference code in any of the special journals is very important.
My Accounting Course is a world-class educational resource developed by experts to simplify accounting, finance, & investment analysis topics, so students and professionals can learn and propel their careers. Remember that your debit and credit columns must equal one another. sales journal example Finally, at the end of the month, the accounts receivable trial balance is prepared. In the next section, we’ll talk more about what each debit and credit means for the sale entry. But it’s still important to make sure that there’s an accounting record of every sale you make.
What is the Sales Journal Entry?
Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs. An allowance is a price reduction on an item, often because of a sale or a flawed item like a floor display model with a dent.
So, instead of adding it to your revenue, you add it to a sales tax payable account until you remit it to the government. 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. Any accounts used in the Other Accounts column must be entered separately in the general ledger to the appropriate account. Figure 7.25 shows how the refund would be posted to the utilities expense account in the general ledger.
Sales Discount or Allowance Entry
As an example, on January 3, amounts related to invoices and are posted to Baker’s and Alpha’s accounts, respectively, in the appropriate subsidiary ledger. At the end of the month, the total of $2,775 would be posted to the Accounts Receivable control account in the general ledger. Baker Co.’s account in the subsidiary ledger would show that they owe $1,450; Alpha Co. owes $625; and Tau Inc. owes $700 (Figure 7.18).
The example below also shows how postings are made from the sales journal to both the subsidiary and general ledger accounts. Each individual sale is posted to its appropriate subsidiary account. All the sales on account for June are shown in this journal; cash sales are recorded in the cash receipts journal. The total of all of the cash disbursements for the month would be recorded in the general ledger Cash account (Figure 7.27) as follows.