Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: The Sales Ledger

  • A sale occurs when goods bought with intention of reselling them are sold
  • We have already looked at the Sales Day Book and the Sales Leger here
  • We have already looked at how transactions can be entered in the Sales Day Book and transferred to the Sales Ledger
  • However often in examinations and/or exercises students will be asked to make translate worded transactions into the sales ledger
  • To recap what has been said in the topics above:
  • The Sales Ledger is used to record credit sales
  • For this reason the Sales Ledger is sometimes known as the Debtor’s Ledger
  • This is because customers who buy goods on credit become the business’s debtors
  • It is a book (it could be a real physical book or a computer program which simulates this) that contains a list of the business’s debtor accounts
  • When goods are sold on credit each transaction is recorded in the corresponding debtors account
  • The Sales Ledger is not used to record cash sales

Sales Ledger transactions and their entries:

  1. When a credit sale is made for $x to J Moyo:
    1. Debit the J Moyo’s Account in the Sales Ledger with the amount of the sale
    2. Credit the Sales Account in the General Ledger with $x
  2. When the customer pays using Cash/Bank but there is no discount:
    1. Debit Cash/Bank Account(s) in the Cash Book
    2. Credit the J Moyo (the Customer’s) Account in the Sales Ledger
  3. If the payment transaction involves Cash Discount:
    1. Debit Cash/Bank with the Discounted Amount and record the corresponding amount in the Discount Column
    2. Credit the Debtors Account in the Sales Ledger with the Discounted amount
    3. Credit the Debtor’s Account with the Discount

NB There are plenty of other adjustments that can be made involving the Sales Ledger, these will be touched on when we encounter them

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