CHAPTER 13

Sales and sales returns day books

Contents

What is the sales day book? What is the sales returns day book? Entering sales transactions in the day

books Coding data Posting the day book totals

Chapter scenario

What is the sales day book?

Used to keep a list of all the invoices and credit notes sent out to customers each day

Referred to as a 'book of prime entry' or a 'primary record'.

What is the sales day book?

Invoice number should be an unbroken numerical sequence Numbers of spoiled invoices should be entered too, with

blanks in the 'amounts' columns and/or a note as cancelled under 'customer’

Complete sales day book

Coding

What is the sales returns day book? A chronological listing of sales returns Records the value of goods returned to

the business by buyers, dealt with by the issue of credit notes

Analyzing sales

Sales may be analyzed into different categories, according to the information needs of the business and its system of accounting.

A spreadsheet could be used as a model to produce an analysed sales day book.

Receivables (sales) ledger packages

1. Sales invoices are typed out.

2. The details on invoices are keyed into the computer using a keyboard and VDU.

3. One of the 'reports' which the computer is able to produce might be a listing of sales invoices and credit notes for a particular day

1. Certain information will be input, such as the date, the customer number, product codes and quantities.

2. The computer package will use this information to produce invoices.

3. The package will collect the information on the invoices and credit notes needed to create the sales day book.

More on computerized systemIn some computer systems, a system for recording inventories of

goods held is combined (or 'integrated') with the system for processing sales orders.

1. The details of goods which a customer orders are keyed in and recorded by the Sales Order Processing (SOP) system, which can then produce an order acknowledgement form to send out to the customer.

2. When the goods are despatched to the customer, details of this despatch can be keyed in to the computer together with the number of the order which is being satisfied. The computer will then produce a sales invoice, using the information it already has about the order.

3. Reports may be produced of sales and returns made on a particular day or in a particular period to give the information which a 'traditional' sales day book would contain.

Coding data

A code is defined as a system of symbols designed to be applied to a classified set of items to give a brief accurate reference, facilitating entry, collection and analysis. Saves time in copying out data Save storage space, computer systems

make use of coded data.

Various coding systems

Sequence codes: given the next available number in a rising sequence Suitable for document

numbering eg invoice numbers

Block codes: different sequence for each different group of items. E.g.: South East code

numbers 10,000-19,999

South West code numbers 20,000-29,999

Wales code numbers 30,000-39,999

Significant digit codes: some digit(s) imply part of the descriptions. E.g.: 5000 Electric light

bulbs 5025 25 watt 5040 40 watt 5060 60 watt 5100 100 watt

Various coding systems

Faceted codes: made up of a number of sections. E.g.: If SU stood for suit, M

for man and B for blue, a garment could be given the code SU M B 40 17. Similarly

ND F W 14 23 could stand for woman's white nightdress size 14, style 23.

Hierarchical codes: tree structure. E.g.: 5 Business 5 2 Finance 5 2 1 Cost accounting 5 2 1.4 Standard

costing 5 2 1.4 7 Variance

analysis 5 2 1.4 7 3 Fixed

overhead variances

Coding example for ledger

Posting the totals

To which accounts? Part of the double entry book keeping

Sales account Sales tax account Receivable control account

Sales ledger personal account/ receivables personal account Each individual sales transaction is entered in the

sales day book(s) and needs to be recorded in the personal receivables ledger account of the customer.

What for???

The process

Sales tax

Narrative: Posting sales

Narrative: Posting sales returns

Example

Complete the nominal ledger postings summary below with the double entry required to record the sales on 17 and 18 March 20X7 as detailed in the previous question, earlier in this chapter.

List of account codes. Sales C 2010 Sales G 2020 Sales E 2030 Sales X 2040 Sales returns C 2310 Sales returns G 2320 Sales returns E 2330 Sales returns X 2340 Sales tax control account

4000 Payables ledger control

account 0310 Receivables ledger control

account 0210

Cash sales

Where does it go?

Quiz

1 What is the purpose of the sales day book?2 What is the purpose of the sales returns day

book?3 Why do businesses maintain personal

accounts in the receivables ledger?4 What is another name for the 'receivables

control account'?5 What is the function of this account?6 A cash sale will be shown in the receivables

ledger. True or false?

Answer

1 To record credit sales on a daily basis.2 To record returns of credit sales on a daily basis.3 To show who owes what to the business at any

given time. This information is not in the sales day book or the receivables control account.

4 The receivables ledger control account, or the 'total receivables account'.

5 To record in total the amounts posted to the customers' individual memorandum accounts in the sales ledger.

6 False. The receivables ledger only records credit sales.

QB 30

The sales account is

A Credited with the total of sales made, including sales tax

B Credited with the total of sales made, excluding sales tax

C Debited with the total of sales made, including sales tax

D Debited with the total of sales made, excluding sales tax