Sales Journal: Definition with Example

This free online accounting training class on Sales Journal will help you to understand:

  • What is Sales Journal
  • Definition of Sales Journal
  • Example of Sales Journal
  • Entries of Sales Journal
  • Sales Posting Procedure

Many students wonder what is sales journal.In short, Definition of Sales Journal could be as a special journal which is kept to record those sales entries which are sold on account.Selling of goods or services on cash or on account is such a transaction which occurs in every business or in every company. If the product or service is sold in the exchange of cash then the cash sales are generally recorded in a cash receipts journal. But when a product is sold on account, a pre numbered sales invoice is prepared which specifies the date that the sale is occurred, the amount of sales, the cost of product and the types of products sold on account. One copy of the sales invoice is must send to the accounting department as it works as the basis for any entry which is part of the sales journal.

The sales journal enlists all credit sales in chronological order. But the transactions of sales return or sales discounts or sales taxes are not included in the sales journal as special journal include those transactions which are frequently occur in the business. If such transactions are also frequently occur in the business then sales journal will include sales return or sales discount or sales taxes.

The sales journal is a part of special journal which differs from the general journal regarding some criterion. For example, as sales journal record all transactions of sales the entries do not contain any separate explanations which general journal does. There are no debit and credit columns in sales journal because the total transactions are always recorded as a debit to Accounts Receivable and a credit to Sales Revenue. Moreover the sales journal consists of a column for the sales invoice number which is works as easy reference to a source of additional information.

Sales journal saves time and keeps the general ledger in manageable form as all accounts receivable are enlisted here. Individual account for each client are very time consuming and difficult. Most of the companies generally maintain three types of ledgers: the general ledger which include all the balance sheet and income statement accounts; the accounts receivable subsidiary ledger; and the accounts payable subsidiary ledger. The subsidiary ledgers enlist individual accounts for each customer and creditor maintaining an alphabetical order, showing all debits, credits with their balances. The total of all accounts in the accounts receivable subsidiary ledger should equals the balance in Accounts Receivable in the general ledger. Accounts Receivable is referred as a control account as it summarizes the individual accounts in the accounts receivable subsidiary ledger. When the all transactions of sales journal are posted to the accounts receivable subsidiary ledger accounts, the individual account numbers will entered in the posting reference column sales journal and the number of the sales journal page and the date of the transaction are also entered as a posting reference in the subsidiary accounts.