Sales and Revenue Transactions

You record daily sales in a sales journal. To simplify your bookkeeping, we recommend a combined sales and cash receipts journal. With a journal that combines sales and cash receipts, you record all sales (cash and credit) and all cash receipts, including collection of accounts receivable, in one journal.

Entries in your sales and cash receipts journal come from the source documents you use in your business every day. These documents are sales invoices, daily cash register totals, daily cash sheets, and daily sales registers.

Sales invoices. If you use sales invoices, you will post the information from each invoice to an entry in the sales journal. If you maintain customer charge accounts, you will also be posting entries to the accounts receivable ledgers so that each customer account is up-to-date. Sales invoices should be numbered. At a minimum, prepare two copies; give one copy to the customer, and retain the other. Preferably, you should prepare the invoices in triplicate, with two copies retained by you. File one by customer name; the other by invoice number. Include canceled or voided invoices when filing by number, so that you can account for all of them. The invoice should show the date of the sale, quantity, if applicable, price or rate, an extension column, if applicable (quantity multiplied by price), and a payment due date.

If you use a computer software program to perform your accounting, it probably has a pre-designed sales invoice that you can use. Most office suites (such as Microsoft Office or OpenOffice.org) also contain a template that may be used as a starting point to design your own sales invoice. In addition, free templates may be found on a number of websites.

Cash register totals. If you use a cash register, daily sales can be totaled on the register. Most new cash registers should be able to separately record cash sales and charge sales, and keep track of sales tax. Some should also be able to record cash received on account. At the end of the business day, record your cash register totals in the sales journal.

You total the cash registers of your automotive supply store at the end of the day. The totals show cash receipts of $1,640, cash and charge sales of $1,325 and $450, respectively, which include sales tax of $75, and $315 received for payment on customer charge accounts. You will make the following entry in your combined sales and cash receipts journal:

	Debit	Credit
Cash	1,640
Accounts receivable	450
Sales		1,700
Accounts receivable		315
Sales tax payable		75

When you become more comfortable with bookkeeping entries, you could simplify the above entry slightly by "netting" the change in accounts receivable for the day:

	Debit	Credit
Cash	1,640
Accounts receivable	135
Sales		1,700
Sales tax payable		75

Cash sheets and sales registers. If you don't use a cash register, you can record cash receipts on a daily cash sheet and record sales on a columnar sales register. The sales register is simply a record of each sale for the day. Total the cash sheet and sales register at the end of the day. Enter the totals in the sales and cash receipts journal.