Sales Journal
🎯 Learning Objectives
- Understand the purpose and structure of the sales journal
- Identify which transactions belong in the sales journal
- Record credit sales entries in the sales journal
- Explain why only one amount column is needed
- Describe the posting process from sales journal to ledgers
- Apply proper sales journal procedures for merchandise businesses
📚 Background & Principles
The sales journal is a special journal designed specifically to record credit sales of merchandise. It's one of the most efficient journals because every entry follows the same pattern: debit Accounts Receivable and credit Sales Revenue for the same amount.
🔑 Key Concepts
Sales where payment is not received immediately. Customer is billed and agrees to pay later (account receivable).
Sales of goods purchased for resale to customers. Not sales of assets or services.
Only one amount column needed because debits (AR) always equal credits (Sales) for each entry.
Reference number for each sale, used for tracking and customer billing purposes.
Posting Reference column showing where amounts have been posted (subsidiary account numbers).
Column total posted to general ledger at month-end; individual amounts posted to subsidiary daily.
🔍 Deep Dive
Explore the sales journal at different levels of depth:
🟢 Foundational Level
Understanding the basic concept of the sales journal.
The Bar Tab Analogy
Opening a Tab
The sales journal is like a restaurant that only opens tabs—every customer who runs a tab gets recorded the same way.
If a customer pays CASH, they cannot be in this journal. Go to the Cash Register (Cash Receipts Journal).
Since every entry here is "On Credit," we don't need to write "Debit AR, Credit Sales" every time. We just write the amount ONCE!
Sales Journal Structure
| Date | Account Debited | Invoice # | PR | Amount |
|---|---|---|---|---|
| Oct 1 | Johnson Co. | 801 | ✓ | $4,500 |
| Oct 3 | Smith Inc. | 802 | ✓ | $2,800 |
| Oct 7 | Brown & Co. | 803 | ✓ | $5,200 |
| Month-End Total | $12,500 | |||
🟡 Standard Level
Understanding posting procedures and journal efficiency.
The Posting Process
Step-by-Step Flow
Each customer name is posted to their individual account in the Accounts Receivable subsidiary ledger.
A checkmark (✓) in the PR column indicates posting to subsidiary is complete.
The $12,500 total is posted to Accounts Receivable Control (debit) and Sales Revenue (credit).
Verify: Subsidiary total = AR Control balance
Sample Subsidiary Entry
Johnson Co. Account
| Date | Description | Debit | Credit | Balance |
|---|---|---|---|---|
| Oct 1 | Invoice #801 | $4,500 | $4,500 | |
| Oct 15 | Payment | $4,500 | $0 |
🔴 Advanced Level
Understanding journal design principles and control integration.
Why One Column Works
The Mathematical Certainty
In the accounting equation for a credit sale:
Since this ALWAYS balances, we only need ONE amount column!
What Doesn't Go in the Sales Journal
| Transaction | Where It Goes | Reason |
|---|---|---|
| Cash sale of merchandise | Cash Receipts Journal | Involves cash debit |
| Sale of old equipment | General Journal | Not merchandise sale |
| Service revenue | General Journal | Not sale of goods |
| Sales return/allowance | General Journal | Not initial sale |
🎨 Interactive: Sales Journal Posting
Click to post entries from the sales journal to the subsidiary ledger:
| Date | Account Debited | Invoice # | PR | AR Dr. / Sales Cr. |
|---|---|---|---|---|
| Oct 1 | Johnson Co. | #801 | - | $4,500 |
| Oct 3 | Smith Inc. | #802 | - | $2,800 |
| Oct 7 | Brown & Co. | #803 | - | $5,200 |
| Month-End Total | $12,500 | |||
🚫 Common Misconceptions & Professional Tips
✅ Reality: ONLY credit sales of merchandise go in the Sales Journal. Cash sales go to Cash Receipts Journal, and non-merchandise sales go to General Journal.
✅ Reality: In the Sales Journal, a checkmark (✓) in PR means posting to SUBSIDIARY ledger is complete. GL posting happens at month-end with the column total.
✅ Reality: Sales returns and allowances are recorded in the General Journal because they reverse the original sale and require specific debit/credit analysis.
🧠 Memory Aids & Quick Reference
GOES IN Sales Journal IF:
• Credit sale (not cash) AND
• Merchandise (not assets or services)
ONE COLUMN because:
• Debit (AR) = Credit (Sales) ALWAYS
Date | Customer Name | Invoice # | Amount (one column)
Customer name → Accounts Receivable Subsidiary Ledger (checkmark in PR)
Column Total → AR Control (Dr) and Sales Revenue (Cr)
Subsidiary Total = AR Control Balance
📖 Glossary
A special journal used to record all credit sales of merchandise, featuring a single amount column since debits equal credits for each entry.
A sale where the customer is billed and agrees to pay at a later date, creating an account receivable.
Goods purchased by a business for the purpose of resale to customers.
A document recording a sale, showing quantity, prices, and payment terms, used as the source document for sales journal entries.
Posting Reference column in journals indicating where amounts have been posted (subsidiary account numbers or checkmarks).
The general ledger account that summarizes all amounts owed by customers, supported by the accounts receivable subsidiary ledger.
The income account credited when merchandise is sold, representing the selling price of goods delivered to customers.
A sale where payment is received immediately, recorded in the Cash Receipts Journal rather than the Sales Journal.
🎯 Knowledge Check: Sales Journal
Test your understanding of the sales journal:
Question 1: Which transaction goes in the Sales Journal?
Question 2: Why does the Sales Journal have only one amount column?
Question 3: When are individual customer amounts posted to the subsidiary ledger?
Question 4: When is the column total posted to the general ledger?
Question 5: What does a checkmark in the PR column indicate?