Credit Sales Journal Entry With Example

Previously we studied about Cash Sales Journal Entry with Example, but here we focus on Credit Sales Journal Entry or Sales On Account Journal Entry With the help of an example.

Business needs credit from other businesses (suppliers) from time to time in order to operate the business effectively. Such Credit needs to be paid within the operating cycle of the business. A Business gives Sales Discount to Customers if the customers paid the amount of goods sold before the due date.

As you know that, the person who bought or purchased goods from business became the Accounts Receivable or Customer of the business, so when goods sold on credit are called Credit Sales.

For Example, when the business sold goods worth Rs. 5000 to Mr. A (Customer), then the accountant records the following Accounting Journal Entry in the Journal of Business:

Mr. A 5000 

                           Sales a/c 5000

 (Goods sold on Credit Worth Rs. 5000)

Mr. A as a Account Receivable or Debtor is increasing, so we debit it as a Current Assets. Sales is also increasing, so we credit it as Revenue and it is the added to the Income.

So, it is all about Cash Sales Journal Entry.