Sales journal is a book of original entries in which transactions relating to sales are recorded. It is also known as the “book of sales.” Sales journal entries are typically made on a daily basis, and include information such as the date of the sale, the customer’s name, the amount of the sale, and any applicable taxes.
In double-entry accounting, each time a sales journal entry is made, two offsetting entries are recorded in other accounting journals. For example, when a sale is made on credit, the corresponding entries would be:
Sales Journal
Debit Credit
Accounts Receivable XXX
Sales XXX
General Ledger
Debit Credit
Cash/Bank XXX
Accounts Receivable XXX
The first entry records the Accounts Receivable, which is an asset, and the second entry records the Sales, which is revenue. These two entries will offset each other and cancel each other out in the accounting books.
Sales journal entries are important because they provide a record of all sales transactions that have taken place. This information can be used to generate various financial reports, such as income statements and balance sheets. Additionally, the sales journal can be used to track customer payments and account receivables.