Sales Journal

Special Journals

In a typical 2-column manual accounting system, transactions are entered as debits to one (or more) account and balancing credits to one (or more) account. If you consider some recurring transactions (such as sales) that will hopefully occur many times during an accounting cycle, all this double entry can add up to a lot of work. That's where special journals come into play.

Special journals are designed as a simple way to record a single type of frequently occurring transaction. The types of special journals depends on the nature of the business, but a few types are frequently seen in businesses that rely on manual accounting procedures:

Sales Journal

Sales journals are used for recording sales of merchandise on account, aka credit sales. (Cash sales are not recorded here, they belong in the cash receipts journal.)

Since every sales entered in the sales journal will result in a debit to accounts receivable and a credit to the sales income account, it is not neccessary to repeat that information, or even both sides of the resulting journal entry in the sales journal. All that is required here is the date and amount of the sale and which customer is responsible for paying. This makes keeping the journal current very simple.

Sales Journal Examples

Consider, for example, that you make 5 credit sales transactions this month. In a 2-column manual accounting system, you would have 5 pairs of entries in your general journal that look like Figure A below.

(To see Figure A, click the A button in the flash program at the bottom of this page. This is where you'll find all the figures for this tutorial.)

That's 10 lines in your general journal. With the sales journal, however, you only have five lines as shown in Figure B below.

Posting from the Sales Journal

When you record credit sales in your sales journal, you post individual transactions to customer accounts in the accounts receivable ledger.

In your general ledger, you only need to post a single total to the Accounts Receivable and Sales accounts, as shown in Figure C.

Sales Returns and Allowances

When merchandise is sold and subsequently returned, or the seller grants an adjustment to price, this entry is recorded in the general journal.

(Remember, the sales journal is used for recording credit sales only. Sales returns are not credit sales, and do not fit into any of the special journals, so they go in the general journal.)

The debit portion of the transaction is recorded in the Sales Returns and Allowances account in the general ledger, while the credit portion is recorded in the Accounts Receivable account (as shown in Figure D below).

In the case of a cash refund, Sales Returns and Allowances is debited and Cash is credited (as shown in Figure D below). Also, since this transaction involves a cash payment, this entry would be recorded in the Cash Payments Journal.

Sales Journal Illustrations

The Sales Journal is a special journal designed to record a single type of frequently occurring transaction — in this case, credit sales. This tutorial covers the concept of the sales journal from the original transactions through the posting process.