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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 entry records a cash or credit sale to a customer.
The Post Ref. column in the subsidiary ledger and controlling accounts is labeled SJ-1 to represent page 1 of the sales journal. The sales journal, sometimes called the credit sales journal, is used to record all sales made on account. The sales journal has five columns to record the necessary information relating to credit sales. If your sales returns and allowances account is high compared to your revenue account, you may be offering too many discounts or have a product quality issue. So, instead of adding it to your revenue, you add it to a sales tax payable account until you remit it to the government.
Sales Discount or Allowance Entry
At the end of each month, the total of sales return journal is debited to the Return inwards (Sales return) account in the general ledger. Individual entries in the sales return day book is credited to respective customer’s account in the sales ledger. The sales journal only stores receivables; this means that sales made in cash are not recorded in it. A sale made in cash would instead be recorded in the cash receipts journal.
The DR (debit) Other column would be handled a little differently as you need to look to the account column to find out where these individual amounts should be posted. In this case, we would post a $200 debit to merchandise inventory and a $300 debit to utility https://www.vizaca.com/bookkeeping-for-startups-financial-planning-to-push-your-business/ expense. Under the periodic inventory method, the July 6 shipping costs would go to a Transportation In account and the July 25 discount would go to Purchases Discounts. The general journal is the all-purpose journal that all transactions are recorded in.
Cash Disbursement Journal
The seller uses it to record a sales transaction in the sales journal and the buyer uses it to record a purchase transaction in the purchase journal. Finally, the amount of time needed to post entries is reduced. Although each transaction must be posted to the subsidiary accounts receivable ledger, only the totals for the month have to be posted to the general ledger accounts. All the sales on account for June are shown in this journal; cash sales are recorded in the cash receipts journal. If you have accounting software or a bookkeeper, you may not be making these entries yourself. But knowing how entries for sales transactions work helps you make sense of your general journal and understand how cash flows in and out of your business.
