The Sales Journal is used in accounting to record the balances of accounts in the general ledger. It is primarily used in manual accounting systems, but can also be used in computerized ones. It is an excellent tool for any small business owner who does not want to spend countless hours entering each invoice manually. Here are some ways to make the most of a Sales Journal. Let us begin! Read on to learn how to create and maintain your Sales Journal!
The first column in your sales journal lists the dates of each sale. Some journals include a time column as well. In some cases, the software will automatically enter the date, time, and the name of the good sold. Then, it will update your inventory every time it needs to be updated, and it will order goods from your supplier when it runs low on inventory. You should include dates in your sales journal as this helps you keep track of the sales you make throughout the year.
Sales are the income-generating activity of a business. The sales journal records the income generated by the sale of goods and services. The credit side of your sales journal records the sales that are made. On the debit side, you enter returns of goods. This occurs when customers return items or pay cash for them. The money that the customer spends on your products is refunded. If you receive the money from the sale, the cash sales in your sales journal would show up on the credit side.
When you make purchases, you should record the price of the goods. Then, record the value of your products by debiting the Accounts Receivable account and crediting the sales account. You should always ensure that the debit column equals the credit column. For example, if you sell a pair of shoes for $125, the invoice would show up as a debit in the Accounts Receivable account and a credit in the Sales account.
The sales journal is useful when credit sales are involved. Using a sales journal to record these transactions will save you time and reduce the possibility of duplication in journalizing. You will be able to keep track of each transaction by using columns. The information will be taken from a copy of the sales invoice or sales slip. Then, you can post the entries as debits or credits to the accounts receivable and sales account in the general ledger.
When a customer pays you by credit, you must create a sales journal entry. This debit will decrease the Accounts Receivable account and credit the Revenue account. You should also record any sales tax you have to pay on the item. Once you create a sales journal entry, make sure that the total amount you charge is equal to the invoice amount and the money you receive. In the next article, I’ll show you how to use a sales journal for a small business.