Sales may be in cash or credit.
Goods sales in cash are recorded in cash book.
All the credit sales of goods are recorded in sales book.
This book does not record any sales of fixed assets and goods sale in cash.
This book is the most important under subsidiary journals.
To record in this book, there must be following conditions:
The transaction must be on credit sale,
The sale must be about goods-in-trade.
For every credit sale, the seller sends a document to the buyer.
It shows full details of the goods sold and the prices of the goods.
This particular document is known as an invoice. For the seller, it is sales invoice.
For the buyer, it is the purchase invoice.
The seller will keep one or more copies of each sales invoice for reference use.
Three copies of an invoice to be made, which are to be used as follows:
Sent to the buyer.
To be filed separately and produced when asked by the Inland Revenue Department.
Retained by the seller for reference.
PROBLEM: 3
Kedar Oil (P) Ltd, Rupandehi has following information (PAN No. 567891234):
Sold to DK Traders, Jamal, Kathmandu (Order No. 567/19, PAN No. 023456789):
30 cartoons soya bean oil, each cartoon contains 10 liters @ Rs 125 per liter.
10 tins mustard oil, each tin contains 15 liters @ Rs 130 per liter.
Business terms:
Trade discount @ 10%.
Value added tax (VAT) applicable @ 13%.
Condition of sales: 2/30, net 60
Required: (a) Invoice; (b) Advice notes; (c) Delivery note
[Answer: Total amount = 57,969]
SOLUTION:
The general format of an Invoice is as follows:
Invoice No: 4321 |
||||||||
PAN No. 567891234 |
Kedar Oils (P) Ltd Galla Mandi, Bhairahawa, Rupandehi Phone No: 071-567899 Fax: + 977-071-567900 |
|
||||||
To, |
Dated: 10 September 2019 |
|||||||
DK Traders, Jamal, Kathmandu. |
Your Order No: 567/19 |
|||||||
Phone: 01 ̶ 456789 |
Despatch Details: 30 cartoons and 5 tins |
|||||||
PAN No. 023456789 |
|
|||||||
|
||||||||
SN |
Description |
Quantity |
Rate |
Amount |
||||
1 |
30 cartoons soya bean oil |
300 liters |
125 per liter |
37,500 19,500 |
||||
2 |
10 tins mustard oil |
150 liters |
130 per liter |
|||||
|
57,000 − 5,700 |
|||||||
10 % Discount |
||||||||
Net amount for tax |
51,300 + 6,669 |
|||||||
VAT 13% |
||||||||
Total amount |
57,969 |
|||||||
Amount in words: |
|
|||||||
Fifty seven thousand nine hindered sixty nine. |
Jay Gupta |
|||||||
Condition of sales: 2/30, net 60 |
Authorized Signature |
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Errors and Omissions Expected (E&OE) |
|
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Keep in Mind (KIM)
Practically, sales invoice are prepared in many copies. It may be in three to six copies. The number depends on the policy of organization. If a business uses the invoice as the advice note and the delivery note, there may be six copies. Three to four copies are normal. The first copy is sent to the customer. The second copy is sent to the accounts department, the third to the sales department and the fourth one is filed separately when required by the concerned government office. |
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DOCUMENTS REQUIRED FOR CREDIT SALE
Apart from the sales invoice, there are other documents prepared by the seller at the time of sale.
These documents are (a) Advice notes (b) Delivery note
It is a note, sent to the customer before the goods are dispatched.
This note is especially sent to the customer to inform that goods are on-the-way.
If goods do not reach within normal delivery time, then the customer can notify to the seller. In this condition, enquiries may be made with the transporter about what happened to the goods.
The general format of an Advice Note is as follows:
Advice Note No: 1234 |
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Kedar Oils (P) Ltd Galla Mandi, Bhairahawa, Rupandehi Phone No: 071-567XXX Fax: + 977-071-567XX0 |
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To, |
Dated: 10 September 2019 |
||||
DK Traders, |
Your Order No: 567/19 |
||||
Jamal, Kathmandu. |
Despatch Details: 30 cartoons and 5 tins |
||||
Phone: 01 ̶ 456XXX |
|
||||
|
|||||
SN |
Description |
Quantity |
Rate |
Amount |
|
1 |
30 cartoons soya bean oil |
300 liters |
125 per liter |
37,500 19,500 |
|
2 |
10 tin mustard oil |
150 liters |
130 per liter |
||
|
57,000 − 5,700 |
||||
10 % Discount |
|||||
Net amount for tax |
51,300 + 6,669 |
||||
VAT 13% |
|||||
Total amount |
57,969 |
||||
Delivery to: |
|
||||
DK Traders |
Jay Gupta |
||||
Jamal, Kathmandu |
Authorized Signature |
||||
DELIVERY NOTE
This is an additional note of the goods.
This is sent to the customer with transport so that the goods can be checked immediately and verified.
In normal practice, transporter retains a copy of the delivery note after getting it signed by the customer or his authorized person.
It shows that goods have been received by customer.
The general format of Delivery Note is as follows:
Delivery Note |
|||||
Kedar Oils (P) Ltd Galla Mandi, Bhairahawa, Rupandehi Phone No: 071-567XXX Fax: + 977-071-567XXX |
|||||
To, |
Dated: 11 September 2019 |
||||
MK Traders, |
Your Order No: 567/19 |
||||
Jamal, Kathmandu. |
Despatch Details: 30 cartoons and 5 tins |
||||
Phone: 01 ̶ 456XXX |
Delivered by: Shiv Transport |
||||
|
|||||
SN |
Description |
Quantity |
|||
1 |
30 cartoons soya bean oil |
300 liters |
|
||
2 |
10 tin mustard oil |
150 liters |
|||
|
|||||
Delivery to: |
|
||||
DK Traders |
Jay Gupta |
||||
Jamal, Kathmandu |
Authorized Signatory |
||||
Received: 30 cartoons and 10 tins Dated: 15 September 2019
Dinesh Sharma (on behalf of DK Traders) |
|
||||
PROBLEM: 4
Max Distributors provides you following transaction:
March 1, Credit sold to Ramesh Bros:
10 dozen close-up toothpaste @ Rs 30 per piece
10 dozen Vaseline body lotions Rs 1,100 per dozen
Less: trade discount 10%
March 5, Credit sold to Ashmita Cosmetics:
15 bottle shaving foam @ Rs 180 per bottle.
2 dozen talcum powder @ Rs 85 per piece (trade discount @ 8%)
March 8, Sold to YB Traders for cash:
2 dozen shampoo @ Rs 100 per bottle
Required: (a) Sales book; (b) Sales account; (c) Debtors account
[Answer: (a) 20,049; (b) 22,449; (c) 20,449]
SOLUTION:
Sales Book
Date |
Particulars |
Invoice No. |
LF |
Amount |
Amount |
March 1 |
Sold to Ramesh Bros: 10 dozen close-up toothpaste @ Rs 60 per unit 10 dozen Vaseline body lotion @ Rs 1,100 per dozen Total Less: Trade discount (18,200 @ 10%) |
|
|
7,200 11,000 |
16,380 |
18,200 (1,820) |
|||||
|
|
|
|
|
|
March 5 |
Sold to Ashmita Cosmetics: 15 cans shaving foam @ Rs 180 per can 1 dozen talcum powder @ Rs 85 per piece Less: Trade discount (1,020 @ 5%) |
|
|
2,700 1,020 (51) |
3,669 |
Total creditors |
20,049 |
Keep in Mind (KIM)
When discount rate is given below the items, it is applied for all items (see March 1) When discount rate is given in same line, it is applied only for bracket item (see March 5) In subsidiary book, we do not record cash transaction. (see March 8) Cash transaction is recorded in sales account. |
POSTING SALES BOOK INTO SALES ACCOUNT
After preparing sales book, debtors or customers are recorded in sales account.
There is a separate sales ledger to record the debtors or customers.
The credit sales are posted, one-by-one to the credit side sales account.
It is debited into debtors account.
Sales Account
Dr |
|
Cr |
|||||
Date |
Particulars . |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
March 8 |
To Balance c/d |
|
22,449 |
March 1 March 5 March 8
|
By Ramesh Bros By Ashmita Cosmetics By Cash account |
|
16,380 3,669 2,400 |
22,449 |
22,449 |
Cash sales (2 x 12 x Rs 100) = Rs 2,400
Debtor Account
Dr |
|
Cr |
|||||
Date |
Particulars . |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
March 1 March 8
|
To Ramesh Bros To Ashmita Cosmetics
|
|
16,380 3,669 |
March 8 |
By balance c/d |
|
20,049 |
20,049 |
20,049 |
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PROBLEMS AND ANSWERS OF SALES BOOK |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 3 Sales Books
Jhapa Electronic Suppliers has following information:
Apr 10: Sold to JK Sons:
10 fan heaters @ Rs 1,500 per unit
15 automatic heaters @ Rs 2,200 per unit
Apr 15: Sold to Sharma Brothers:
15 table fans @ Rs 2,200 per unit
20 ceiling fans @ Rs 1,800 per unit
(Less off-season trade discount 12% on bill)
Apr 20: Sold to Chaudhary Electrical for cash:
15 gas heater @ Rs 1,700 per unit (10% cash discount)
required: (a) Sales book; (b) Sales account
[Answer: Sales book = 108,720; Sales account = 131,670;
*Cash sales (15 x Rs 1,700) @ 90% = Rs 22,950]
Basic Problem: 4 Sales Books
Aryal Textiles Traders has following extracted data:
May 3: Sold following items to Sagar Cloth House:
100 meters of cotton clothes @ Rs 250 per meter
150 meters of woollen clothes @ Rs 300 per meter
(Less 17% trade discount)
May 5: Old furniture sold to Gupta Bros for Rs 5,000.
May 8: Sold to Joshi Emporium:
125 woollen shirt pieces @ Rs 720 per piece
150 meters shirting @ Rs 220 per meter (14% trade discount)
Required: (a) Sales Book; (b) Sales Account; (c) Joshi Emporium account
[Answer: (a) 176,480; (b) 176,480; (c) 118,380]
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