Cambrige Notes: Principles of Accounting: Making entries in the Sales Ledger

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Making entries in the Sales Ledger

In this example we will make entries into the Sales Ledger, Cash Book and General Ledger
We will be skipping the books of original entry
Although this is not how things are done in practice
Examination/Exercise question might ask you to make double entries in the Sales Ledger without asking you to use the Sales Day Book
You should note that in these instances it will do you no good to create a Sales Day Book as no marks will be awarded for its preparation

The following transaction took place in Tatenda Maukazuva’s business for the month of July

1 Credit sales to B Havadi $310
2 Sold goods worth $1300 cash
3 Credit sales to T Fuza $285
5 B Havadi paid $300 cash in full settlement of his account
6 Credit sales to L Mataure $38
7 Sold goods worth $2000 cash to B Havadi
10 Credit sales to B Havadi $74
17 Credit sales to H Hore $534
19 Credit sales to J Nyanga $92
27 Credit sales to T Mataure $44
31 Credit sales to B Havadi $112
31 H Hore paid us $534 using a bank transfer

Solution

					Sales Ledger
				DR	B Havadi Account			Cr
		Date	Details	Amount($)		Date	Details	Amount($)
		1 Jul	Sales	310		5 Jul	Cash	300
		10 Jul	Sales	74		5 Jul	Discount	10
		31 Jul	Sales	112

					T Fuza Account
		Date	Details	Amount($)		Date	Details	Amount($)
		3 Jul	Sales	285

					L Mataure Account
		Date	Details	Amount($)		Date	Details	Amount($)
		6 Jul	Sales	38

					T Mataure Account
		Date	Details	Amount($)		Date	Details	Amount($)
		27 Jul	Sales	44

					H Hore Account
		Date	Details	Amount($)		Date	Details	Amount($)
		17 Jul	Sales	534		31 Jul	Bank	534

					J Nyanga Account
		Date	Details	Amount($)		Date	Details	Amount($)
		19 Jul	Sales	92

					Cash Book
Date	Details	Discount($)	Cash($)	Bank($)		Date	Details	Discount($)	Cash($)	Bank($)
2 Jul	Sales		1300
5 Jul	B Havadi	10	300
7 Jul	Sales		2000
31 Jul	H Hore		534

					General Ledger
					Sales Account
		Date	Details	Amount($)		Date	Details	Amount($)
						1 Jul	B Havadi	310
						2 Jul	Cash	1300
						3 Jul	T Fuza	285
						6 Jul	L Mataure	38
						7 Jul	Cash	2000
						10 Jul	B Havadi	74
						17 Jul	H Hore	534
						19 Jul	J Nyanga	92
						27 Jul	T Mataure	44
						31 Jul	B Havadi	112

					Discount Allowed Account
		Date	Details	Amount($)		Date	Details	Amount($)
		31 Jul	Monthly total	10

You will note that we have recorded the 7 July transaction to B Havadi as a cash sale rather than adding it to his account in the Sales Ledger. This is because only Credit Sales are recorded in the Sales Ledger
You will also note that we have credited the Sales Account with each sale. That is acceptable. It would also be acceptable to simply transfer the total credit sales for the month to the credit side of the sales account. Such a total would not include cash sales as shown below

			General Ledger
			Sales Account
Date	Details	Amount($)		Date	Details	Amount($)
				2 Jul	Cash	1300
				7 Jul	Cash	2000
				31 Jul	Total credit sales for the month	1489

In these case credit sales are recorded in the Sales Day Book (which you don’t have to prepare), only Cash Sales are recorded in Sales Account in the interim. The total of credit sales for the month is then transferred from the Sales Day Book.
It is important to note that the decision as to when the total is transferred to the Sales Account is up to the business in question, it could be monthly, weekly, daily etc but it has to be consistently stuck to.

To access more topics go to the Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes.

Cambrige Notes: Principles of Accounting: Making entries in the Sales Ledger