Sales Journal (Sales Day Book)

The sales journal, sometimes referred to as the sales day-book, is a special journal used to record credit sales. The sales journal is simply a chronological list of the sales invoices and is used to save time, avoid cluttering the general ledger with too much detail, and to allow for segregation of duties.

It should be noted that the sales journal only includes credit sales to customers for merchandise and does not for example, include cash sales, sale returns, or credit sales for non merchandise items such as fixed assets. Cash sales are included in another special journal called the cash receipts journal, sale returns are included in the sale returns journal or if not used, the general journal, and credit sales for non merchandise items are also included in the general journal.

The information recorded in the sales journal is used to make postings to the accounts receivable ledger and to relevant accounts in the general ledger. The journal is a book of prime entry and the entries in the journal are not part of the double entry posting.

Information Listed in the Sales Journal

The information in the sales journal is taken from the copy sales invoices sent to customers and typically includes the following:

  • Transaction date
  • Customer
  • Accounts receivable ledger reference
  • Sequential sales invoice number
  • Invoice Amount
  • Sale type columns (sales tax, delivery charges etc.)
  • Other

The sale type columns will depend on the nature of business. Some businesses simply have one column to record the sales amount whereas others need additional columns for sales tax, delivery fees charged to customers etc. The multi-column sales journal should always have an ‘other’ column to record amounts which do not fit into any of the main categories.

A typical single column sales journal is shown below.

Sales Journal Columns
Date Customer LF Inv. Amount

The columns in the diagram are the transaction date (Date), customer name (Customer), accounts receivable ledger folio reference (LF), invoice reference number (Inv), and the monetary amount of the invoice (Amount) highlighted in gray.

Sales Journal Example

The use of the sales journal is a three step process.

  1. Information is recorded in the sales journal from copy sales invoices sent to customers
  2. The journal line items are used to update the accounts receivable ledger for each customer
  3. The journal totals are used to update the general ledger

It should be noted that, if the business maintains an accounts receivable ledger control account in the general ledger, then only step 3 above is part of the posting.

1. Sales Journal is Updated from Copy Sales Invoices

Each sale invoice is recorded as a line item in the sales journal as shown in the example below. In this example some information has been omitted to simplify the example. In practice, each line item would include the information listed above.

Sales journal entry
Date Customer Inv. Amount
06/03 BCD Inv 14 400
06/15 KLM Inv 15 150
06/30 PQR Inv 16 350
Total 900

Each line represents the information from a sales invoice.

2. Sales Journal Used to Update the Accounts Receivable Ledger

On a regular (usually daily) basis, the line items in the sales journal are used to update each customer account in the accounts receivable ledger. In the above example, 400 is posted to the ledger account of customer BCD, 150 to customer KLM, and 350 to customer PQR. When posting to the accounts receivable ledger, a reference to the relevant page of the journal would be included.

As the business maintains control accounts in the general ledger, the accounts receivable ledger itself is not part of the, it is simply a record of the amounts owed to each customer.

3. Sales Journal Totals Used to Update the General Ledger

At the end of each accounting period (usually monthly), the sales journal totals are used to update the general ledger accounts. As the business is using an accounts receivable control account in the general ledger, the postings are part of the system.

In the above example, the journal total for the month is 900, and in this particular case represent merchandise sales made on credit terms to customers. The sales journal entry would be as follows:

Sales journal entry used to update the general ledger
Account Debit Credit
Accounts receivable 900
Sales 900
Total 900 900

In this case, the sales account is credited to record the credit sales for the period. Had the sales journal recorded other items such sales tax, delivery fees charged to customers etc, then the credit would have gone to the appropriate tax or income account.

The debit entry is to the accounts receivable control account in the general ledger, and represents the amount outstanding to the business from its customers for the merchandise supplied.

Sales Journal Proof of Postings

The are two checks which can be made at the end of an accounting period to prove that the information in the sale journal has been correctly transferred to the ledgers, as follows:

  1. The total line item postings to the accounts receivable ledger made in step 2 above, should equal the total posted to the accounts receivable control account in the general ledger in step 3 above.
  2. The total of all the customer account balances in the accounts receivable ledger should be equal to the balance on the accounts receivable control account in the general ledger.
Sales Journal (Sales Day Book) February 22nd, 2017Team

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