 In this presentation we will record sales transactions or revenue transactions using a sales journal as opposed to using a general journal. We will be using the data on the left side. These will be the sales that will be taking place in this current month. We will be recording those to the sales journal and that is as opposed to a traditional journal entry where we would have the debit and the credit recorded out and have two line items for each item. Once we do have the sales journal completed as of the end of the month then we'll go through and we'll do the entire month's worth of information in terms of sales to our general ledger with just one journal entry and that will simplify the process. We'll then post that information to the general ledger over here and then that will create the transaction on the trial balance and we'll see how this whole process is taking place. Our goal here is to focus just on those sales transactions. These are going to be normal day-to-day transactions that are going to happen throughout the cycle throughout the month. The idea here being to simplify the process also often done in some type of manual system when we don't want to record the journal entries and maybe we don't have an automatic or automated system in order to do so. If we do have an automated system it's still good to practice the sales journal because it's often the case that we will want to see this data in a similar format as a sales journal. In other words we will run reports which will often show sales broken out in a similar fashion wanting to focus in on those sales transactions. So it's a good idea to look at these. We've taken a look at the normal journal entries for sales in the past. We're going to simplify the process by having just a sales journal. Now the first item here we're going to have a sales journal as if we're a service company rather than a manufacturing company or a merchandising company therefore not dealing with inventory having as simple a sales journal as possible. If we have a service we provide the service then we can just record the transactions here into our sales journal and if all the prices are listed we can list out the price and we have the debit and credit recorded here. Note the simplification here being that we just need the date and we just need to record the transaction one time one amount in this column. This column representing both the debit and the credit side so we just put the one number here represents both the debit and the credit. Note however we do need the customer as well because we're going to have to record this not only to the general ledger we'll also have to record it to the subsidiary ledger in order to know who you know who owes us money. The sales journal also is only going to be there not just when sales happen but when sales on account happen. In other words only sales on account will be recorded here and if we had a sale for cash even though we had a sale and it is a sales transaction it is not going to go in the sales journal because we received cash and it would go into the cash receipts journal that's going to be the most common problem that we see when we first learn these journals and that's pretty much because the simplification of the name here isn't as specific as it should be it's really a sales journal on account a sales journal for accounts receivable if we got money for that sale at the same point in time then we would record it in the cash receipts journal. So we're just going to list these out as they happen so here if we just had a list of the sales as they happen during the process the same list is basically going to be over here we're just going to say if we had a sale happen at seven seventeen it's a service company we had a sale we're going to say the service was for p company that's who we sold to and the amount is 720 that's all we have to list there we don't need to list out debits and credits because the debit and credit is listed here now we're going to add these up at the end and then post these to a journal entry but we may want to post them as they go also to the subsidiary ledger not the general ledger right now but the subsidiary ledger which needs to be broken out by customer so in this case the sale was p company i'm going to scroll over here and i'm going to scroll down to p company and the subsidiary ledger is going to be down here in our worksheet it's under these two lines the accounts receivable subsidiary ledger is right here and so p company i'm going to say it's a debit because it's in the accounts receivable i'm going to do this with a formula so i'm going to say equals and then go find that number i'm going to scroll up scroll to the left and i know this is uh hard to you know manipulate around but it's going to be an e4 and enter so you could just type in that number but it's better to use the formula if you want to just put equals e4 if you're using the same sales you can do that i do recommend putting equals and then going through the screen because it's a good practice to work through the excel sheet now this is our subsidiary ledger which is going to add up if we add up our customers and add up everything in the subsidiary ledger which are going to be these what is it one two three four five customers right now then it adds up to 720 the reason it's red at this time is because that 720 does not match what is on the trial balance right now it will after we record all transactions and then they total to our journal entry and post that to the general ledger so we'll do this process all the way down the next one it's just going to be the same thing 724 724 there's another sale that was made it's a service sale and not selling inventory so so we could call it fees earned journal but that's typically it's typically called the sales journal and we're going to say this is also to pee company and that was 425 so that's all we have to record we don't have to record the debits and credits this row here shows that it is both a debit and a credit so we're then going to post that not to the general ledger right now but to the subsidiary ledger again for P company then post it to the general ledger all activity for one journal entry for the entire month so we're going to scroll back over here then scrolling back down to the P company we're going to be in sale I or AI 33 we will say equals I'm going to go all the way to the left I'm just using the arrows now scrolling all the way up and we're going to point to that 425 on E5 and then enter again you could come down here to this cell which is AI 33 P company counter seat will subsidiary ledger and type it in there or type the number or this formula equals E5 and enter and it should pull over so now P company owes a 720 plus the 425 or 1,145 and that should tie out to what we have down here so that looks good and scroll back up to the next one we're just going to record this is they're just normal sales that are happening through the month note we are jumping forward in time we're only going to have a few sales for the month it depends on the type of company in terms of how many sales they would have throughout the day it could be a type of company that makes a lot of sales through the day and and that's when this process could be very useful because it'll simplify that sales process even even with a less computerized system and allow us to then do one journal entry at the end to record all the activity for the day week or month so next transaction is going to be 730 and this is going to be for S company these are the people we're selling it to by the way not very creative names but S company that's who that's who we're selling to here and that's going to be for another 425 and so we're going to put that in our subsidiary ledger again not posting it to the general ledger we will do that once we sum all these up for the entire month but posting it to the subsidiary ledger breaking it out by who owes us money by customer scrolling back over scrolling back down we're looking for S company over here so here's our subsidiary ledger here's S company we are in AM 32 so AM 32 and within there I'm going to do this with a formula one more time or once again not one more time and we're going to say equals and I could I'm going to do this with the arrows now I'm going to scroll all the way to the left and then we're going to go up with the arrows and it just keeps on changing the cell reference until I hit enter until I stop it so I'm going to go up here and we're going to go to that 425 in E6 E6 and enter so you could just type it into here I'm back here to AM 32 you could type it in for S company subsidiary ledger 425 but I recommend a formula either doing it that way which I highly recommend because then you can maneuver around the excel sheet and see how it works or type in the formula E equals E6 and that'll pull in that information let's see the next one we're going to scroll and obviously now once again the subsidiary ledger is adding up to 1005 something and that's going to be the adding of these two summing up to the subsidiary ledger that would be the total accounts receivable read because it's not currently being reflected what is in the accounts receivable account not until we do the final journal entry at the end next transaction it's going to be on 730 we're going to say that M company there's another sale M company and that's going to be 425 as well actually no this is going to be for 500 500 for M company so that's going to be our last transaction note the dates are going to be different again these are just going to be transactions that are happening throughout in this case the month and we're going to be recording it for this time period we could do the sales journal on a daily basis a weekly basis a monthly bit depending on the time period that is covered and how often we want to record this and group them up and record it to our general ledger we're going to post this out once again not to the general ledger yet we will sum it up after this and then do a journal entry posting it to the general ledger but now posting it to the subsidiary ledger to M company so we're scrolling back over scrolling back down the subsidiary ledgers down below this red line we're looking for M company so we're going to scroll down it's going to be here here's M company we are in cell AM 40 AM 40 so within AM 40 we're going to do a formula to pull that 500 over equals I'm going to scroll left with the arrows now it's just going to keep changing the cell reference until we stop and we hit enter to where we want it to be and we're going to scroll over to that 500 so there's the 500 it's in cell E 7 and enter so there we have it so once again we could just type it into cell AM 40 typing in the 500 bringing that amount over or we can put equals E 7 I do highly recommend using the formulas so now our accounts receivable subsidiary ledger shows $2070 that read because it's not reflecting what is in our ledger in terms of the general ledger or the trial balance it will hopefully however once we do the transaction at the end of the month being the sum of the sales journal so now we're just going to sum these up we're going to add them up to 720 plus the 425 plus the 425 plus the 720 the total sales made during this time period so let's do that equals we're going to use the sum function most used function the one we really want to know SUM and double click that sum function highlight the 720 down to the 500 and enter so that should match at 2070 should match what we have in the subsidiary ledger we'll double check in the second but I'm very I'm confident it's going to it's going to match so now what we're going to do is a journal entry but journal entry one journal entry instead of however many one two three four journal entries here and obviously if we had a lot of sales transactions this could save a lot of times four journal entries would be a debit and credit here debit and credit here debit and credit here debit and credit here posting that out to the general ledger making the trial balance each time whereas this then just grouping them all together and posting the transaction as a whole the total amount for the time period in this case the month in one journal entry so that's the time saving principle if you do have an automated system like a scanner or if you're putting this into a quick book system or something like that clearly the system will help make that faster so the journal entries can happen as you go through the process a lot more easily if you're using a manual system then a sales journal such as this can save a lot of time if however you are using a automated system you may want to generate reports similar to the sales journal so it's useful to understand what a sales journal looks like and have have the sales listed out such as this people could ask for reports saying something like a like a sales journal and give you that information and software can basically generate and pull this information and put it into this type of format so the journal entry is going to be as of the end of the month so we're in z five we're going to say seven thirty uh be in the date and we're going to type in the uh adjusting entry which is listed here accounts receivables debited sales is credited why because it's our normal type of transaction for a sale uh went on account the sales on account meaning we didn't get cash at the point in time of sale what did we get we got an i o u and accounts receivable accounts receivable is a debit balance account and we're going to make it go up by doing the same thing to it another debit so the debit goes on top i'm going to copy the accounts receivable in a f six paste that in a a five right click and paste one two three and that's going to be for the total amount that two thousand seventy so we're going to say two thousand seventy then we're going to credit something i'm going to represent the credit with a negative or bracketed numbers for our purposes and in the credit column here i'm going to do that with a little formula by saying negative to flip the sign instead of equals and points into that two thousand seventy that'll take that amount flip the sign make it a negative then we're going to put the credit here so the credit then is going to go to some revenue account in our case it's going to be called uh we're just going to call it revenue and that's it could be a little confusing because we called it the sales journal which is typically the name for this type of journal and it typically uh is a name using sales as the type of revenue account often used when selling inventory items uh but it's the same kind of it's a revenue journal it's an income journal uh type of journal transaction here so we're going to say it's the revenue revenue has a credit balance we're going to make it go up by doing the same thing to it which in this case is another credit so we're going to copy that put that up top in a six right click and paste one two three we could indent this just for formatting purposes by going to the home tab alignment and increase indent or just double click on it and spacebar three times and that's just for the formatting purposes okay so now we're going to post this out we're going to post this to the general ledger which will then uh format the trial balance for us so the general ledger is over here this whole thing is going to be the general ledger only all it's doing is is recording these same accounts in the same order assets then liabilities then equity then revenue and expenses so we're going to start off with accounts receivable that's the second account on the trial balance and therefore the second account in the general ledger so here's the general ledger we're in accounts receivable the second account it's going down and then over so cash accounts table and so forth and then we're going to go here to ai 16 we're an ai 16 going to use a formula equals and we'll point to this 2070 and when we hit enter this will go up the accounts receivable will go up here and it'll go up here and it'll put us out of balance down here so let's do that enter so it went up here there it is here on the accounts table uh pulling over from the general ledger and we are of course out of balance down here now we're going to record the second component the revenue component the revenue component is here so it's um you know it's it's the first dark blue account so it's going to be in the same order when we go to the trial balance or the general ledger we've got the asset accounts we've got the liability accounts we've got the equity accounts and then revenue so we're going to be way over here in az 22 we want to be on the credit side so here's revenue credit side we're in az 22 we're going to do this with a formula so I'm going to do the equals here in order to just pull this over and then go point to that cell I'm going to do that with the arrows so we'll go all the way left I'm going to go all the way left here I'm going to scroll up and we're trying to find that revenue account and that credit of 2070 so it's in ac 6 and then enter so it's pulling over that information so there it is this number is pulling from ac 6 and there's the 2000 there's the credit you could type it in here with a negative or you could just use the formula equals ac 6 as long as we're on the same cells and using the exact same formatting and then that number will then pull over to of course the trial balance there's the trial balance there's the 2070 and we're back in balance here here's the net income remember that is net income not loss it's taking the credit in revenue minus the expenses the credits winning here by the 2070 that means that we have net income of the 2070 as we would think because it's the sales journal we made sales we earned revenue even though we didn't get the cash yet also note at this point in time we now have the account receivable at 2070 and the account receivable uh sub ledger I mean the account receivable general ledger at 2070 and then the account receivable sub ledger adding up all of the accounts by customer also lining out to 2070 so when we work with the account receivable we have to do this extra step of the sub ledger listing out who owes us money so we can better handle the collection action and try to collect the money that people will owe us also note that when using a system like this the information won't be correct until the end of the time period on our financial statements or our trial balance until we record the journal entries recording the transactions for the entire time period whether that be day week month in this case the month