 In this presentation we will enter transactions into a sales journal using this information over here related to sales and we will have in this sales journal both a sale that has the accounts receivable and sales component to it as well as the cost of goods sold and inventory component in other words dealing with sales of inventory items as opposed to dealing with sales where we don't have inventory so if we were a service company and we had a sales journal then we would just have this item here where we would have accounts receivable and sales or revenue and we would record the sales as we go. If we are selling inventory then there are two components that we can put into our sales journal and that will include the accounts receivable and sales and the cost of those items. So we're going to enter that data here into the sales journal once we have done that for the entire month we will enter that data into the general journal being here this is going to be the entire month's worth of information we will enter in one transaction for the sales transactions that being the purpose that's saving time then posting that to the general ledger and seeing the result in the trial balance from that transaction recording all the information for the month related to sales. Remember that the sales journal is going to be used and we can think of it as being used if we are using a less automated system or a more manual system in terms of the sales journal and that's going to save times because we are going to be putting things in in one line item as we go and that'll save us time we won't be posting it as we go and it is useful to see the sales journal even if we are using an automated system because it is often the case that we will have the reports that we want to see in terms of a sales journal type report we also want to see different forms of how a different accounting format or structure can be put together look at the pros and cons look at the differences and similarities so first we've got on 717 p company and we have 720 sales cost 54554 so we're going to just list this out and the sales journal is pretty straightforward every sale is is just going to be listed out here we're going to say p company that's who we sell to that's the customer and then the accounts receivable of course the sales amount is going to be higher than the cost we're selling them for more than we purchased them for in other words and note the sales journal only represents sales that are made on account if we got cash at the point of sale even though we made a sale and would still be crediting sales it's not going to go to the sales journal the sales journal only recording those sales on account those of sales we didn't get cash for those journal entries where we're going to increase accounts receivable so it's going to be 720 in this side for accounts receivable and then 540 on the cost of goods sold side so this representing increase accounts receivable increase in sales and which is revenue or income increase in cost of goods sold and decrease in inventory here net income going down from this transaction and the inventory going down so we're going to report this as well we're not going to post it to the general ledger not until we do all the end till we get to the end of the month but for the sales journal we're going to post it to the subsidiary ledger as we go to show who owes us money so that we can go through the collection process at a later time so we're going to say p companies who we're looking for we're going to scroll over to the right scroll down we're looking for p company so here's p company here in our subsidiary ledger so we are in accounts receivable subsidiary ledger p company debit side in sell aj 32 we're going to do this with a formula so we'll say equals and i'm going to scroll to the left i'm going to scroll up and we are looking for that the receivable here the 720 and enter so we could just type this in here if we want to but i recommend formulas you could also type in equals e4 and that'll pull in the 720 we now have in our total subsidiary ledger that 720 adding up all these customers here that 720 is red because it does not now match what is on the accounts receivable gl and accounts receivable trial balance it won't until we reconcile at the end of the time period recording all the transactions for the accounts receivable at the end of the month now we're going to go to 7 24 and once again p company and it's going to be the same format here we're just going to say we sold it on this side accounts receivable and sales 425 we purchased it for 327 same information slightly different sales amounts so it's different type of sale but we're going to post this to p subsidiary ledger again so again we're not posting into the gl not posting it up here but we are going to post it to the subsidiary ledger as we go so now we're down in aj 33 aj 33 in p company debit side for the subsidiary ledger we're going to do this with a formula saying equals scroll to the left scroll it up and we see the 425 here in e5 and enter so once again you could type in 425 or you could type in equals i e5 and then enter and that should go from 720 up by 425 to 1145 which is currently our total once again it's red because we have not entered all the information into our journal entry then we're going to have on 7 30 we're going to have s company and that's 425 once again so we're going to say the sales 425 and 327 is the cost note that if we're a smaller company that's doing this and we have make these sales a lot of the times these the sales price will be much of the same we may be selling very similar items or a variety of items that will have similar sales prices here so we're going to say that this will be s company so we're going to do the same thing posting it not to the gl yet but to the subsidiary ledger so we're going to scroll down finding that subsidiary ledger for s company here it is here's the subsidiary ledger we're going to be in the debit side we are in sale an 32 and 32 an 32 we will say equals and then scroll to the left we're going to find that transaction scrolling up and there we have it that 425 in e6 so within e6 and enter and again if you could type it in there but I recommend formulas you can also type in the formula of e6 equals e6 then we're currently at a total of 1,570 that's still red because we haven't done our journal entry here yet we will do so at the end of the month last one we're going to say on 730 we have for m company a sale of 500 costs for that sale is 385 and there we have that information now we're going to post that the subsidiary ledger once again not the general ledger the subsidiary ledger for m company scrolling to the to the right scrolling down looking for m company so here's m company we're going to be on the debit side so we're here in an 40 an 40 we will say equals scroll left scroll up and there we have the 500 here and enter so now we have the 500 in m again we could type in e7 to enter that information our total now is 2070 once again it's red because that's not what's in our gl and that's not what's on our trial balance however we are now going to sum up this information and hopefully that'll add up to the same amount which we will then post to the gl and then create the trial balance from it so we're going to put the total we're going to sum these up to 720 plus 425 plus 425 plus the 500 doing that with the sum function we're going to say equals sum double click the sum function highlight from the 720 down to the 500 and enter so there's our total there that's 2070 and we're going to do the same thing on this side we could drag it over but I'm going to sum these up so we can see the sum function see us adding this up equals the sum and sum function adding the 555 54 down to the 385 and enter now these are all underlined over here I'm going to underline both of them so here we have the underline and then we'll double underline here just for formatting purposes so there is our amount now we're going to do the journal entry related to the entire sale month's worth of sales note of course once again that we don't have many transactions here but if we were dependent on the company we were working at we may have many transactions per day and the more transactions that are the same the more this type of system would work well so that we could just record it all at one time and then post it over here so we're going to say this is at the at the end of the month 730 and there's going to be two components now of course and it lists it on the sales journal we're going to say accounts receivable debited and then sales credited I'm going to do this with two separate journal entries as is normally done for demonstration type purposes may not be the case for software to have two separate journal entries since they do happen at the same time but we're going to break this out as is the tradition for our demonstration we're going to say that accounts receivable is going to go up accounts receivable is an asset account has a debit balance and therefore we're going to make it go up by doing the same thing to another debit so we'll copy accounts receivable and ag ag 6 right click and copy we're going to put that in cell ab 5 right click and paste 123 the amount's going to go here in ac 5 and we're going to do that by saying equals and then point to that 2070 and enter so we're just pulling that over and then the credit's going to be the same amount but a credit I'm going to do that with a formula nice simple formula instead of equals hitting negative and then selecting that 2070 taking that number and flipping the sign so there we have that now we just need the other account which is sales or revenue and so free scroll down assets liabilities capital or equity and then the sales so here's sales that needs to go up so it has a credit balance we're going to make it go up in the credit direction by doing the same thing to hit another credit so we're going to right click and copy and then we'll scroll up and we'll put that underneath in ab 6 right click and paste 123 so there we have it our first journal it's already indented for us if it weren't we can go to the home tab alignment and increase indenting so now we're going to post this I'm going to post this and then do the second component here so we're going to post this to the general ledger posting first the accounts receivable here it is here in the journal entry here it is there in the trial balance second account on the trial balance then it will be the second account on the general ledger as well here's cash here's accounts receivable we're on the debit side we are here in a j 16 we're going to do this with a formula saying equals and then pointing it to that 2070 bringing that zero balance up by 2072 2070 here's that 2070 here on the trial balance being brought over we are currently out of balance by that amount until we record the other side here's the sales item on the journal entry we need to report here it is on the trial balance it's in order assets liabilities equity then sales we're looking for that first blue account on the general ledger in other words so we're scrolling over here are the assets here are the liabilities here's the equity and there is the sales that we are looking for we want to be on the credit side so here's sales credit side here's the credit balance we are in sell a b 22 a b 22 i'm going to say equals and then scroll to the left until we find the information we need and there it is that 2070 2070 in ad6 and enter and that's a bit of scrolling to get over there i know so you could type in a negative 2070 but i'd rather see the formula i'd rather use the formula and work to find it or you could type in equals ad6 and enter and that should pull over that cell reference as well that 2070 now of course appearing here on the trial balance and appearing as net income it's not net income yet though though because we haven't recorded the second component of this that being the related cost of goods sold and reduction of inventory so i'm going to skip a line and do this in its own transaction now i'd like to think of the inventory first i think that's more intuitive for more people it's tangible so people say inventory will typically have a debit balance and we're making it to go down therefore we're going to do the opposite thing to it now note there's nothing in inventory right now and that's because we're recording the sales journal before the purchases journal so once we record the purchases journal there will be something in here so as of the end of the month we're going to record all the all the journals so we're actually going to end up with a negative inventory at this point until we record the purchase journal so i'm going to copy this we're going to say copy we're going to skip a line we're going to put this on the bottom here so in the new journal entry and then on the bottom in ab9 right click and paste 123 i'm going to indent that go into the home tab alignment increase indentation then we're going to go to the credit side in ad9 we're going to pull this number over but instead of doing that with an equal we're going to say negative and then point to that 1593 and enter and that'll pull it over then we're going to go on on the top here ac8 we're going to take that number flip the sign and pull it up here i'm going to do that with our little formula that being negative instead of equals of that number taking that number and flipping the sign so there we have that now we just need to know what this account will be and we can see here it is cost of good sold the expense related to us consuming the inventory here it is on the trial balance we can see it's in the expense area it's going to go up in the debit direction so we're going to copy the cost of good sold we're going to put that here on top a b8 right click and paste 123 so there we have that now we're going to post this we got the cost of good sold first so that is all the way down here it's the second dark blue account second income statement account assets liability equity income and expense being the order we're looking for that second income statement account on the general ledger so here we have the assets we have the liabilities we have the equity revenue and expenses we're looking up here cost of good sold in a in bd 9 so we're in cost of good sold debit bd 9 we'll say equals we're going to scroll to the left just going to scroll all the way to the left till we find our amount in ac8 of the 1005 93 and enter so there it is 1005 93 if i scroll back over here it is down down here 1005 93 now we're going to the inventory here's the inventory we want to post here it is on the trial balance third account it's going to be the third account on the general ledger therefore so the general ledger here it is third account down we're looking for inventory to be a credit and it's going to go in the credit direction have a negative kind of inventory which is not the case because we haven't recorded the sales journal yet so be aware of that we are in ak 23 we'll say equals scroll to the left scroll back up and we're looking for that 1005 93 and enter and there we have it so we have this credit in inventory until we do the purchases journal here it is the credit in inventory here and that's going to be our transaction note what happened here on the income statement side revenue went up by 2070 that's a credit not a negative in terms of this worksheet and then cost of goods sold went up the net of those two then being a net increase of 477 so that's going to be the sales journal note note how specific the sales journal is and just note that if we do make a sale for cash that it wouldn't go here this is really specific journal one of the most specific type of journals we have only a sale on account will go here and is very definite basically where we are going to put this information we don't have like we have in some of the other special journals in other words on other accounts typically in a sales journal