 In this presentation, we will take a look at a sales journal for a merchandising company. When recording transactions related to a sales journal, we will be recording transactions for sales into the sales journal, those being journal entries that are typically used when we have a system done by hand rather than an automated system. So a sales journal will be used typically when we're having more of a manual system. It is good to know this for a automated system as well because the automated system one might want to run reports that are similar to the sales journal and two it's good to know different types of formats for the accounting process to know what's the same and what is different so that that will better help us to understand any type of system we are using. Remember that the sales journal is typically looking at sales type of transactions but more specifically it's looking for sales transactions on account or transactions that are dealing with sales that were made revenue being recorded but cash not being received instead we will be debiting accounts receivable. It's a very specific type of journal in that we always have the same transactions so we're going to have the debit to accounts receivable and the credit to sales. Now if we sell inventory then we could have another column here on every transaction which will record the second component of the sales type transaction when we sell inventory that being the decrease in the inventory credit to inventory and the related expense of selling that inventory in order to help generate revenue that going to cost of goods sold. When we record the sales journal we're going to enter these data in during the month. It's going to save us a lot of time because we're going to enter one line item per transaction rather than having four line items for a for a normal journal entry each time we record something then recording that to the general ledger then making trial balance for it. Then at the end of the month we'll sum up these columns and we'll make the journal entry making a one journal entry instead of a journal entry every time we make a sale note we will be doing this in our case for a month we could be doing it for a day or a week we will do it for a month and then sum up at the end of that time period and then make that one journal entry at the end of the time period then we'll record this journal entry for the entire month's worth of data to the general journal the general ledger accounts this just being one account but to the general ledger accounts and then we will generate or see the effect on the trial balance of our information. So note that the information that we record in the sales journal will not be reported in the financial statements or the trial balance until the end of the month so we're going to record these sales they're all going to be the same so we'll just list out the sales here this journal works best when we have a lot of similar types of sales so when if we have a lot of transactions during the day we make the same type of inventory sale if we're selling the same type of thing then the sales journal works well so on 717 we're going to say customer p company sales 720 cost 554 so notice how much shorter this this journal would be in the journal entry if we wrote this out in a journal entry we would have to debit accounts receivable credit sales that being similar to a service company type of transaction for the sale and then debit cost of goods sold and credit inventory for the cost of the goods sold reducing the inventory and recorded the related to expense for it here we just have one line item to do that we are not going to be posting this to the general ledger but we will we will at the end once we sum everything up for the entire time period but as we go we're going to post to the accounts receivable subsidiary ledger because we're going to have to do this line by line no matter what so we might as well do it as we go so we're going to say that this 720 we sold it to p company here's p company here in our subsidiary ledger so we're going to say it goes up by 720 to 720 next transaction and this will all be pretty repetitive this will be the same transaction and then we'll sum it up at the end so we'll just do a few of these p company again we're going to sell 425 cost then is going to be 327 so the sales price that we're we have 425 it cost us 327 once again this representing a debit to accounts receivable credit to sales or revenue or income and this representing a debit to cost a good sold-in credit to inventory with just these two numbers then we're going to record that not to the general ledger but to the subsidiary ledger for the 425 owed and that's going to be 4p company bringing the balance up from 720 by 425 to 1145 next transaction on 3 on 730 s company we sold 425 again cost also once again 327 same transaction here just a new vendor we're going to post the new customer we're going to post this not to the general ledger but to the subsidiary ledger we will be posting to the general ledger at the end once we sum up this column of numbers so we'll post this over here to s company in the accounts receivable subsidiary ledger bringing the zero balance up by 425 to 425 next we have the same icon for m company we're going to skip this one just to total it up here so 730 m company 500 and 385 and then we're just going to sum this this columns up so we got the two columns and note we only have a couple transactions here but even in some companies even if we did this on on a day by day basis depending on what we're selling the quantity that we sell we could have a lot of transactions even if we just do the sales journal daily or weekly in this case we got it monthly so we're going to take this 720 plus 425 plus 425 plus 500 gives us the 2070 for the sales and the accounts receivable on the other side we got the 554 the 327 the 327 and 385 giving us the 1593 if we record this transaction we'll record it just as the sales journal tells us to debiting accounts receivable crediting sales this being our typical merchandising type transaction when we sell merchandise we debit the accounts receivable we credit the sales sales is revenue accounts receivable is an asset assets go up with a debit balance we're going to do the same thing to it in order to make it go up another debit sales is a is a revenue account revenue or income has a credit balance we're going to make it go up by doing the same thing to it another credit then we'll do the second component as if there's two separate journal entries here this is typically the way we see this when we are doing this by hand because it helps us to visualize the sales and AR portion and the cost to goods sold and inventory portion if you see it in a computer system or some textbooks may have the two debits on top and record this all in one transaction since it is taking place at the same time so this is going to be a debit or to cost a good so the credit to inventory I typically think of the inventory first because when constructing the journal entry inventory is something tangible I can visually imagine it going down and therefore I know it's a debit balance account so we're going to make it go down doing the opposite thing to it and then we'll debit the cost of goods sold it being an expense a type of expense and the expenses only go up in the debit direction we will increase the expense making net income go down so here's our journal entry for the month we will be recording based on this data we recorded during the month then we'll record that to the general ledger so we'll just look at the accounts that will be affected here in the general ledger accounts receivable we'll start with this accounts receivable 2070 taking accounts receivable from zero up by 2072 2070 then we've got the sales taking the sales from zero up by 2072 2072 2070 and then we're going to the cost of goods sold it has a zero starting balance we're bringing it up by 1193 to 1001 593 1005 93 and then we have the inventory and it is going to negative zero going down negative now the reason it's negative here is because we are recording this end result in the sales journal before doing the purchases journal and since they're all happening at the end of the month then it's we just record one before the other once we record the other we should of course have a debit balance after we we record all journals as of the end of the month so this will flip back to a debit once that happens then we can see that information on the trial balance so here's the 2070 here here it is on the trial balance here's the 2070 in sales on the general ledger here it is on the trial balance here's the 1005 93 cost of goods sold on the general ledger here's the 1005 93 cost goods sold on the trial balance here's the 1005 93 of inventory general ledger negative balance and here it is on the trial balance note that we also want to compare the subsidiary ledger note what we're looking at is the accounts receivable account is what we're working with primarily or a lot of in the purchase it or the sales journal the sales journal could really be called the accounts receivable or sales and accounts receivable or sales on accounts journal this number here represents how much money is owed to the company but it doesn't tell us who owes us the money the detail in the general ledger tells us the dates that it happened and because we're using a sales journal that's really only given us a limited information to we'd have to go back to the sales journal to see the dates of the sales within that time period but either one doesn't tell us who owes us the money for that we need a subsidiary ledger and so we recorded this subsidiary ledger as we go note that if we added all the accounts up for P company one thousand one forty five for S company four hundred twenty five for M company five hundred that adds up to two thousand seventy which of course matches what's on the general ledger and what's on the trial balance