Sales Accounting

Sales Accounting

In this article we would explain sales accounting or accounting for sales. Sales are income or gross income for the organization. Sales are recorded on the bases of invoice (sales invoice is primary document for sales recording). 

Sales are recorded in General journal by debiting the cash or receivable and crediting Sales. There are two possible ways of maintain sales recording.

a)    All Sales (Cash & Credit) are recorded in General Ledger (Small organization)

b)   Credit Sales recorded in Sales Day book (Large organization).

1.   General Journal Sales Accounting Method

With help of an example, we have explained the recording of sales in General Journal, and then posting of sales entry into General Ledger. This method is chosen by small scale organization, which has limited sales transaction.

Sales Accounting Example

Cash Sales= 10,000

Credit Sales to Aslam= 20,000

Record the transaction General Journal & General Ledger?

Sales Recording in General Journal

Sales being income is credited , while cash is credited due to increase in asset.

Date	Particulars	Dr	Cr
	Cash A/c	10,000
	Sales		10,000

Date	Particulars	Dr	Cr
	Aslam A/c	20,000
	Sales A/c		20,000

Posting in General Ledger

The above two entries will be transferred to General ledger. we can see that there are three accounts are involved in these two entries i.e. Sales, Cash, Aslam. Sales are transferred to credit side of sales account, while cash and debtor figures are transferred to debit side in respective accounts. 

                                                     Sales Account

Date	Particulars	Dr.	Date	Particulars	Cr.
				Cash	10,000
	Profit & Loss	30,000		Aslam	20,000
		30,000			30,000

Cash was debited in journal entry, so it would be transferred to debit side of cash account.

                                                     Cash Account

Date	Particulars	Dr.	Date	Particulars	Cr.
	Sales	10,000
				Balance	10,000
		10,000			10,000

Ali account was debited in journal entry, so it would be transferred to debit side of Ali Account.

                                                         Aslam Account

Date	Particulars	Dr.	Date	Particulars	Cr.
	Sales	20,000
				Balance	20,000
		20,000			20,000

Trial Balance 

Trial balance can be extracted from above accounts as under. In this method individual debtor would appear in the trial balance as individual accounts are maintained in General Ledger.

Accounts	Dr.	Cr.
Sales		30,000
Aslam A/C	20,000
Cash	10,000
	30,000	30,000

 2.   Sales Day Book Method of Sales Accounting

Recording in sales day book and posting in General Ledger has been explained below.

a)    Credit Sales are recorded in Sales Day book.

b)   Sales Journal is maintained for high volume Sales transaction.

c)    Sales Journal total are entered in General Ledger.

d)   Sales Journal form part of Double entry system.

e) Subsidiary Ledger is maintained for individual customer as memorandum record.

Example

Credit Sales made to following during week

Aslam = 20,000

Ali = 30,000

Fahad = 40,000

Recording in Sales Day Book

In this method transaction are initially entered in special journal maintained for credit sales known as sales journal or sales day book. All credit sales are recorded in the sales journal.

                                                   Sales Day Books

Aslam	20,000
Ali	30,000
Fahad	40,000
	90,000

Posting in General Ledger

At the end of day or week or month (depends on volume of transactions) the sales figures are transferred to sales account and total creditor account in General Ledger. This has been shown below

                                                 Total Sales Account

Date	Particulars	Dr.	Date	Particulars	Cr.
			Total Debtor		90,000

                                                Total Debtor Account

Date	Particulars	Dr.	Date	Particulars	Cr.
	Total Sales	90,000

Memorandum Record

Memorandum record is of creditor is maintained in subsidiary ledger. This ledger contains all account of creditor , these accounts are also updated from the sales day book on individual bases. 

For control purposes the individual balances in subsidiary ledger are reconciled with total debtor account on periodical bases.

                                                  Aslam A/C

Date	Particulars	Dr.	Date	Particulars	Cr.
	Sales	20,000		Balance	20,000

                          

                                                Ali Account

Date	Particulars	Dr.	Date	Particulars	Cr.
	Sales	30,000		Balance	30,000

                                              Fahad Account

Date	Particulars	Dr.	Date	Particulars	Cr.
	Sales	40,000		Balance	40,000