Let’s have a look at an example of an entry in the general journal for a sale on credit (sales that will only be paid for in 30 or 60 days etc.):-
Note - Accounts Receivable is the ‘control account’ ledger
used for recording sales that have not yet been paid for. If the sale
was paid for right away the debit account would be ‘bank'.
There is a problem with this type of entry...
... many sales on credit require the entry of repetitive bookkeeping journals
which would be tedious. It is better to only have one journal to enter
- a summary of all sales on credit - at the end of the month.
Therefore, it makes sense to maintain a separate journal designed to handle customer transactions... The Sales Journal.
The sales are listed under each other using only one column for the amounts.
This takes away the need to do debit and credit entries and a
description line for each and every sale, which greatly reduces time
spent on this task.
At the end of the month, the list is totalled and the debit and credit journal entry indicated on the bottom line.
The reference is the first letter of the client’s name (or
surname for an individual), or it could be assigned a number, eg. if the
Accounts Receivable ledger is given the account number ‘003, then
customers could be given the number 003.1, 003.2 etc.
Here is a sample of a Sales Journal:-