1.0
INTRODUCTION
In your previous
studies, you have learnt that in any business, the number of cash and bank
transaction is quite large. Hence, the firms always maintain a separate book
called Cash Book to record them. Similarly, the transactions relating to sales
of goods are also large in number and they
take place too frequently. It is,
therefore, considered desirable to maintain separate book for sales also. In
this note, you will learn how transactions relating to sales are recorded in
the book of original entry.
2.0
OBJECTIVES
After studying this note,
you should be able to:
• Explain what is
meant by Sales
• Prepare Sales and
Sales Returns Journals and post them into ledger.
3.0
MAIN CONTENT
3.1
Sales Journal
The Sales Journal is
used for recording the credit sales of goods only. The credit sales of items,
which do not constitute goods are not to be recorded in this book. The Sales
Journal is also called 'Sales Day Book'.
The ruling of the
Sales Journal is similar to that of the Purchases Journal. The difference is
only with regard to the second column. In purchase journal, the second column
is used for recording the name of the supplier. But, in the case of the Sales
Journal, it is used for writing the name of the customer.
You
know goods are sold on credit, an Invoice is given to the buyer. The seller
generally has a bound invoice, which contains consecutively numbered invoices
in duplicate. While the original copy is given to the buyer, the duplicate
remains in the book itself The entries in the Sales Journal are made with the
help of the duplicate copies of the invoices issued.
The customer to whom
the goods are sold on credit becomes debtor to the firm. Hence, cash sales
recorded in the Sales Journal is posted to the debit of the personal account of
the customer column. The total of the Sales Journal is posted on the credit
side of the Sales Account by writing 'By Sundries — as per Sales Book'.
3.2
Sales Returns Journal
When customers return
goods to the business, it is normally recorded in a separate book called 'Sales
Returns Journal'. If, however, the number of such returns are small, they can be
recorded to in the Journal itself The Sales Return Journal is also called
'Returns Inwards Journal' or Sales Return Book'. Its ruling is more or less
similar to that of Purchases Returns Journal. The second column of the Sales
Return Journal is used for recording the name of the customer and the third
column for credit note number, while in Purchases Return Journal, they are used
for recording the name of the supplier and debit note number respectively.
When customer returns
goods to the business, statement called 'credit note' is issued to him. It
contains particulars and value of goods returned by him. The entries in Sales
Return Journal are made with the help of credit notes issued. While recording
the account of sales returns, you must remember that if the original sales
involve some trade discount, it is also adjusted in the value of goods
returned. The transactions recorded in the Sales Returns Journal are posted to
the respective personal accounts in the ledger. Separate accounts in the name
of each customer already exist in the ledger (opened at the time of sale).
Credit the customers' account individually by writing 'By Sales Returns
Account' and then post the total of the Sales Returns Journal to the debit side
of the Sales Returns Account, by writing 'To Sundries — as per Return Journal'.
Look at the
illustration and study how credit transactions relating to goods are recorded
in various special purpose subsidiary books and postings made in various
special purpose subsidiary books and posting made in the ledger.
Illustration
Enter the following
transactions in proper subsidiary books of Chekra
Enterprises and show
their postings into ledger.
1987 N
Aug 1 Sold goods to Ram Singh 2,550.00
Aug 2 Brought goods from Dhillon 1,220.00
Aug 3 Sold goods to Gopinath 2,500.00
Aug 4 Purchased goods from Habeeb 3,600.00
Aug 5 Ram Singh returned goods 350.00
Aug 6 Goods returned to Dhillon 250.00
Aug 9 Gopinath returned goods 150.00
Aug 10 Return goods to Habeeb 260.00
Aug 12 Bought goods from
Sanyal 4,750.00
Aug 13 Sold goods to Sailo 6,200.00
Aug 14 Sold goods to Michael 4,350.00
Aug 15 Purchased goods from Anthony
3,940.00
Aug 18 Returned goods to Sounyal 320.00
Aug 19 Sailo returned goods
230.00
Aug 22 Michael returned goods 150.00
Aug 25 Returned goods to Anthony 250.00
Aug 27 Sold goods to Solanki 5,340.00
Aug 28 Purchased goods from Gopinath
4,670.00
Aug 29 Sold goods to Harbinder Singh subject
to trade discount of 5% 2,000
Aug 30 Purchased goods
from Bhandari subject to trade discount of 10% 1,000
Exercise
Enter the following
transaction in Sales Journal and post them into ledger
1988
Jan 5 Sold to Ray
Kalmar of Lagos
50 metres coating @
N110.00 per metre
200 metres putplin @
N7 per metre
Less 5% trade
discount
Jan 18 Return by Ray
Kumar of Lagos
40 metres purplin @
N7 per metre
Less 5% trade
discount
Jan 25 Sold to Mohan
& Co. Kano
100 metres artificial
sill @ N12 per metre
75 metres voil @ N18
per metre
Less 10% trade
discount.89
Jan
20 Sold to Gopal Brothers, Jos
100 metres shirting @
N15 per metre
60 skirts @ N70 per
skirts
Less 10% trade
discount
Jan 30 Returned by
Mohan & Co, Kaduna
20 metres artificial
silk @ N12 per metre
Less 10% trade
discount
Answer:
Sales Book Total - N13,980.00, Sales Returns Book Total — N482.00)
4.0
CONCLUSION
Sales Day Book or
Sales Journal is a book of prime entry to which sales of goods on credit are
recorded and where they are posted in total (either weekly, monthly or at
reasonable interval) to the Sales Account in the Sales Ledger.
5.0
SUMMARY
When goods are sold on credit, the
individual accounts of the customers are debited with their respective debts
but the corresponding credit in the Sales Accounts is deferred and collected in
the Sales Book in data order till the end of the approved time interval when
they are added up and the total posted to the credit of sales account in the sales
ledger. When this has been done, the double entry in the ledger has been
effected in that the individual debits to the personal accounts are balanced by
the total credit to the sales ledger.
0 comments:
Post a Comment