Here, sales mean sales of business goods, inventory or merchandise.
After purchasing the goods, they are sold including profit.
Sometimes at the time of stock clearance, there may be loss.
Sales are the most important elements of entire business.
The sales amount must include only sale of goods NOT sales of fixed assets.
Sales include both the cash and credit sales made during the accounting period.
Sales returns or return inward is deducted from sales.
It is main income of organization.
It is credited in journal entry and in trading account.
Cash1 account |
Dr |
Cash received |
Increase in assets |
Bank2 account |
Dr |
Cheque received |
Increase in assets |
Mr A’s account3 |
Dr |
Credit sales to person |
Increase in assets |
XYZ Traders3 account |
Dr |
Credit sales to firm |
Increase in assets |
Debtor4 or customer account |
Dr |
Credit sales but no name |
Increase in assets |
Bills receivable5 account |
Dr |
Bill received |
Increase in assets |
To Sales account |
Dr |
Total value of sales |
Increase in revenue |
(Being- goods sold………..) |
|
|
|
Keep in Mind (KIM)
When nothing is saying about transaction, it is cash1 transaction. When ‘cheque or bank’ is given in the question, it is bank2 transaction. When name of person1 and firm3 is given, it is credit transaction. When cash and cheque is given with name of person and firm is given, it is cash transaction. When credit sales are given but name of person or firm is not given, we should write debtor4. Bills receivable5 is credit transaction but it is secured transaction. |
Journal Entry
In the book of …………
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Cash account |
Dr |
|
xxxxx |
|
|
Bank account |
Dr |
|
xxxxx |
|
|
Mr A’s account |
Dr |
|
xxxxx |
|
|
XYZ Trading account |
Dr |
|
xxxxx |
|
|
Debtors or customer account |
Dr |
|
xxxxx |
|
|
Bills receivable account |
Dr |
|
xxxxx |
|
|
To Sales account |
|
|
|
xxxxx |
|
(Being- goods sold …………………………………………..………) |
|
|
|
PROBLEM: 3A
June 17, SK Book Supplier sold books and copies for cash Rs 80,000
Required: Journal entry
[Answer: Sales = 80,000]
SOLUTION:
Journal Entry
In the book of SK Book Supplier
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
June, 17 |
Cash account |
Dr |
|
80,000 |
|
|
To Sales account |
|
|
|
80,000 |
|
(Being- books and copies sold in cash) |
|
|
|
Journal Entry for American Style
Date |
|
|
Debit $ |
Credit $ |
June, 17 |
Cash account |
|
80,000 |
|
|
To Sales account |
|
|
80,000 |
|
To goods/inventory sold for cash ………………………………… |
|
|
|
Journal Entry for European Style
Date |
|
|
|
€ |
€ |
June, 17 |
Cash account |
Dr |
|
80,000 |
|
|
To Sales account |
|
|
|
80,000 |
|
To goods/inventory sold for cash …………………………… |
|
|
|
|
PROBLEM: 3B
AD Wine Dealer sold Signature Whisky for cash Rs 45,000; Red Label Whisky by cheque Rs 85,000
Required: Journal entry
[Answer: Sales = Rs 130,000]
SOLUTION:
Journal Entry
In the book of AD Wine Dealer
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Cash account |
Dr |
|
130,000 |
|
|
Bank account |
Dr |
|
|
45,000 |
|
To Sales account |
|
|
|
85,000 |
|
[Being- Signature Whisky and Red Label Whisky (goods) sold in cash] |
|
|
|
PROBLEM: 3C
AK Hardware Store sold plywood by cheque Rs 150,000; sun-mica for cash Rs 30,000 and mirror glass of Rs 50,000 to Sharma Traders
Required: Journal entry
[Answer: Sales = Rs 230,000]
SOLUTION:
Journal Entry
In the book of AK Hardware Store
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Bank account |
Dr |
|
150,000 |
|
|
Cash account |
Dr |
|
30,000 |
|
|
Sharma Traders account |
Dr |
|
50,000 |
|
|
To Sales account |
|
|
|
230,000 |
|
[Being- plywood, sun-mica and mirror glass (goods) sold in cash and on credit] |
|
|
|
Keep in Mind (KIM)
Sharma Traders* is the name of business firm (company, organization, concern) Sold to business firm is debit transaction; Therefore, Sharma Traders is debited. |
PROBLEM: 3D
MK General Store sold sundry goods worth Rs 2,000 on credit
[Answer: Sales = 2,000]
SOLUTION:
Journal Entry
In the book of MK Departmental Store
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Debtors account |
Dr |
|
2,000 |
|
|
To Sales account |
|
|
|
2,000 |
|
(Being- sundry goods sold on credit) |
|
|
|
|
|
|
|
|
|
Keep in Mind (KIM)
Most of small firm are not registered. They do their business without VAT or GST bill. They do not have name of firm also. They supply goods direct to purchaser. In PROBLEM: 3D goods sold on credit but there is not any name of purchaser. When name of purchaser is not given in the question, we should write Debtors. |
PROBLEM: 3E
CK Distributors sold saree for cash Rs 80,000; shirting by cheque Rs 150,000; suiting worth Rs 40,000 to Sapana Saree Center and ladies suit worth Rs 3,000 to Sarita.
Required: Journal entry
[Answer: Sales = 273,000]
SOLUTION:
Journal Entry
In the book of CK Distributors
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Cash account |
Dr |
|
80,000 |
|
|
Bank account |
Dr |
|
150,000 |
|
|
Sapana Saree Center account |
Dr |
|
40,000 |
|
|
Sarita’s account |
Dr |
|
3,000 |
|
|
To Sales account |
|
|
|
273,000 |
|
(Being- saree, shirting, suiting and ladies suit (goods) sold in cash and on credit) . |
|
|
|
Keep in Mind (KIM)
Sapana Saree Center* is the name of business firm. It is credit transaction; therefore, it is debited. Sarita is the name of person, it is credit transaction; therefore, she is debited. |
PROBLEM: 3F
Sagar InfoTech, distributor of electronics goods, has following transactions:
June 1 Tablets PC sold to Narayani Computers for cash Rs 75,000.
June 3 Printer sold worth Rs 60,000 and cheque received.
June 5 Antivirus sold to Janakpur Computer House worth Rs 17,000 and bill received
June 6 Software CD and DVD sold to Mr Gupta worth Rs 3,000.
Required: Journal entries
SOLUTION:
Journal Entry
In the book of Sagar Infotech
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
June, 1 |
Cash account |
Dr |
|
75,000 |
|
|
To Sales account |
|
|
|
75,000 |
|
[Being- tablet PC (goods) sold to Narayani Computers |
|
|
|
|
|
for cash] |
|
|
|
|
June, 3 |
Bank account |
Dr |
|
60,000 |
|
|
To Sales account |
|
|
|
60,000 |
|
[Being- printers (goods) sold to and cheque received] |
|
|
|
|
June, 5 |
Bills receivable account |
Dr |
|
17,000 |
|
|
To Sales account |
|
|
|
17,000 |
|
[Being- antivirus (goods) sold to Janakpur Computer House |
|
|
|
|
|
and bill received] |
|
|
|
|
June, 6 |
Mr Gupta’s account |
Dr |
|
3,000 |
|
|
To Sales account |
|
|
|
3,000 |
|
[Being- software CD and DVD (goods) sold to |
|
|
|
|
|
Mr Gupta on credit] |
|
|
|
|
Keep in Mind (KIM)
Tablets sold to Narayani Computer for cash, it is cash transaction; therefore cash is debited. |
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 4 SALES
The following extracted information is given to you:
(a) EP Publication sold books for cash Rs 30,000.
(b) DK Wine Dealer sold Ruslon Vodka for cash Rs 25,000; Blue Label Whisky by cheque Rs 35,000.
(c) MN Hardware Store sold plywood by cheque Rs 80,000; four-mica for cash Rs 20,000 and window glass of Rs 15,000 to Chaudhary Traders
(d) MK Kirana Pasal sold sundry goods worth Rs 2,000 on credit
(e) CK Cloth House sold saree for cash Rs 60,000; suiting worth Rs 40,000 to Khushbu Saree Center; shirting by cheque Rs 50,000; and ladies suit worth Rs 2,000 to Manju.
Required: Journal entries
[Answer: Sales: (a) 30,000; (b) 60,000; (c) 115,000; (d) 2,000; (e) 152,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 5 SALES
SVS Mobile House, distributor of electronic gadgets, has following transactions:
June 1 Tablets PC sold for cash Rs 35,000.
June 3 Mobiles sold worth Rs 40,000 and bill received.
June 5 Memory card sold to Sky Computer House worth Rs 17,000 by cheque.
June 6 Mobile accessories sold to Mr Pant worth Rs 2,000 on account.
Required: Journal entries
[Answer: Sales: (1) 35,000; (3) 40,000; (5) 17,000; (6) 2,000]
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