From The Student Room

TSR Wiki > Study Help > Subjects and Revision > Revision Notes > Accounting > A Level Accounting Module 1 - The sales daybook

---

The sales daybook

In many businesses most of the sales will be made on credit rather than for immediate settlement of the amount. For some businesses all sales will consist entirely of credit sales, while for some other firms, all will be for cash settlement. It is realistic to expect most firms to have some cash and some credit sales. All credit sales should be entered into the sales daybook.

The source document for the sales daybook is the sales invoice. A sales invoice is simply a business document containing all the details of the sale made. The business will keep a copy and will send another copy of the invoice to the customer. Details contained on the invoice would include:

• Name of customer
• Address of customer
• Date of sale
• Value of sales
• Any trade discount
• Any cash discount - and details of the conditions
• Invoice number

Contents 1 Trade discounts 2 Making entries in the sales journal 3 Posting from the daybook to the ledger 4 Also See 5 Comments

Trade discounts

Firms may have different types of customers. Some firms will offer further discounts to either regular customers or to other firms.

This type of discount is known as a trade discount. There is no double entry for trade discounts. The trade discount may be referred to on the sales invoice, but it should not show up in either the sales daybook or the ledger accounts. To compare with cash discounts:

Trade discounts: are not shown in double entry accounts.

Cash discounts: are shown in double entry accounts.

When calculating the actual amount that needs to be paid or is expected to be received it is vital that the discounts are dealt with in the correct order. The correct procedure is to deduct the trade discount first before calculating the cash discount - do not simply add the discounts together then calculate them!

Making entries in the sales journal

From the sales invoice the firm will enter the value of the sales (after deduction of any trade discount but before any cash discount) and other relevant information into the sales daybook. If we use the above example of an invoice as the first entry and then include some more credit sales, the sales daybook for the month of January 2002 would appear as follows:

The above example is a simplified version of full sales daybook. The above example does not contain a column for VAT - which would normally be expected for a UK trader (this is covered later in the section on VAT).

Also, the above example does not have a folio column. If this was the case then each entry in the sales book would have a reference as to where the account would be found. For example, by the entry for D Atkinson on January 1st, the reference could say, 'SL24'. This means that D Atkinson's account would be on page 24 of the sales ledger. By the total figure for the month could be something like 'GL3', which means that the total is transferred to the sales account, found in the general ledger on page 3.

In the ledger accounts each account mentioned above would have the reference 'SB 2' - that they were original entered on page 2 of the sales daybook.

Posting from the daybook to the ledger

Credit sales are posted to the debit side of each customer's account in the sales ledger and at the end of each period the total of the credit sales is posted to the credit of the sales account in the general ledger.

Effect on sales ledger:

D Atkinson

2002	-	£	2002	-	£
Jan 1	Sales	816	-	-	-

C Reynolds

2002	-	£	2002	-	£
Jan 3	Sales	1,640	-	-	-

T Wright

2002	-	£	2002	-	£
Jan 15	Sales	220	-	-	-

I Yates

2002	-	£	2002	-	£
Jan 22	-	1,100	-	-	-

Each of these items is posted (transferred from the daybook to the personal account) when the sale occurs. However, at the end of the month, it is the total for the month that is transferred from the daybook to the sales account in the general ledger.

Effect on general ledger:

Sales

2002	-	£	2002	-	£
-	-	-	Jan 31	Total credit sales for month	3,776

By doing it this way, we save cluttering up the sales account with lots of entries. The customer accounts will remain with each individual entry posted to them when it occurs.

Also See

• Double entry bookkeeping
• Daybooks and ledgers
• Cashbooks and petty cashbooks
• The sales daybook
• Purchases daybook
• Returns daybooks
• The Journal
• Trading and profit and loss accounts
• Balance sheets
• Features of the VAT system
• VAT and the double entry system
• The trial balance
• Bank reconciliation statements
• Control accounts
• Suspense accounts and the correction of errors
• Computers in accounting

Comments

These notes are aimed at people studying for AQA A Level Accounting Unit 1, but will also be suitable for other courses and exam boards.

Originally submitted by duke_stix on TSR Forums.