Journal Entry To Record Sales

The Journal Entry To record Sales depends upon types of Sales Transaction i.e., if it is a Cash Sales, then we debited cash account and credited Sales accounts, but if sales is made on credit basis or on account (Credit Sales), then we Debited Accounts Receivable instead of Cash Account and credited Sales accounts.

For Example, if Mr. A sold goods worth Rs. 5000 To Mr. B for Cash, then following entry is recorded in the Cash Book of Business as shown below:

                                                                     Cash a/c     5000

                                                                                   Sales a/c    5000

(Sold Goods For Cash)

In the above entry, the cash is increased by Rs. 5000 as it is coming into the business and according to Rules of Debit And Credit, when cash increases, we debit it. Similarly, the Sales is also increasing as goods are going out of the business in exchange of cash and since when sales increases, we credit it.

On the other hand, if Mr. A sold goods worth to Mr. B on Credit Basis for Rs. 5000, then Mr. B becomes the Accounts Receivable / Debtor of the business as Mr. B must pay to Mr. A on the specified time or before due date. In this the entry is:

                                        Accounts Receivable a/c   5000

                                                                              Sales a/c  5000

(Sold Goods On Account or Credit)

In the above entry, the customer, Mr. B. becomes the Accounts Receivable of the business and since the company will receive the cash for goods from him, so it is increasing and we debit it. Similarly, the sales is increasing, so we credit it.