SPECIAL PURPOSE SUBSIDIARY BOOK (SALES)

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 unit, you will learn how transactions relating to sales are recorded in the book of original entry.

OBJECTIVES

After studying this unit, you should be able to:
Explain what is meant by Sales
Prepare Sales and Sales Returns Journals and post them into ledger.

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'. 

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'.

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.

 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.