The Journal Entry To Record A Credit Sale Is What?

As, there are two system of Inventory recording, so Journal Entry to record a credit sale is also depended under both system.

1. Under Perpetual Inventory System

The Journal Entry to record credit sale of inventory sold is shown below:

                                   Accounts Receivable a/c  XXX

                                                                            Sales a/c  XXX

                                            (Goods Sold Or Services Rendered On Account)

 

According to the Matching Principle Gaap, we need to match Revenues with the Expenses incurred for earning that particular revenues, so we pass the following Cost of Sales Journal Entry:

                                              Cost of Sales a/c  XXX

                                                                          Inventory a/c  XXX

                                                 (Revenue Matched With Sales Revenue)

2. Under Periodic Inventory System

In this method, the first entry is the same as in case of Perpetual Inventory System i.e.,

                                         Accounts Receivable a/c  XXX

                                                                                  Sales a/c  XXX

                                                        (Credit Sales Recorded For The Period)

However, we need to pass the following Journal Entries at the end of accounting period as shown below:

                                                        Cost of Sales a/c  XXX

                                                                                Opening Inventory a/c  XXX

                                                                                Purchases a/c  XXX

                                                               (Cost Of Sales Is Recorded)

As all the goods are not sold at the end of the accounting period, so there is a need to match sales revenue with the expense (Cost of Sales), so following entry is recorded:

                                              Inventory a/c  XXX

                                                                    Cost of Sales a/c  XXX

                                                (Cost Of Sales Matched With Sales Revenue)