Don't Get It Wrong! This is an example of a correct sales journal for your business

A sales journal is one of the most crucial aspects of recording business finances. 

Every transaction that occurs must be recorded correctly so that financial reports remain accurate. So, why does the sales journal have to be accurate in its calculations? 

So, recording errors can have an impact on profit calculations, taxes, and even the continuity of the business itself, you know. 

As a business actor, you need to understand how cash sales transactions are recorded in a journal. Come on, learn more!

What is a Sales Journal?

A sales journal is a special record that records each sales transaction in detail. Its main function is to help keep records more organized so that the ledger remains neat. 

In recording it, the accounts receivable account will increase while the sales account is recorded as income. This journal focuses more on credit transactions than cash. 

If there is a cash transaction, the recording is usually entered in the cash receipts journal. Even so, many businesses still include cash transactions in the sales diary.

Every transaction recorded in this journal can be traced back to the general ledger using the invoice number listed. Well, an e-invoicing system can help make tracking invoices easier automatically.

This means that, through the use of technology, all sales data can be recorded accurately. Oh yeah, sIn general, there are two types of sales journals that are most commonly used, namely:

• Cash Sales Journal: Recording is done when payment is received directly from the customer.

• Credit Sales Journal: Used when customers pay by credit or installment system.

Which one do you usually use? If you still don't understand, this article will discuss it thoroughly! After this, we will discuss when the sales journal is used?

​​When is a Sales Journal Used?

So, at each at the end of the reporting period, the total debits and credits in this journal will be transferred to the general ledger. If it is necessary to re-check the balance that has been posted, this journal can be used as a reference.

This can be done by searching the invoice number listed. In some cases, adjusting entries are made so that revenues and expenses are recorded in the correct period.

Sales journals are more often used in manual accounting systems. In computer-based accounting systems, transaction recording is done automatically so the existence of this journal may not always be needed.

Read also: Understand Why the Balance Sheet is Important for Business Success

Advantages of Sales Journals

Now, let's discuss the advantages and benefits of this sales journal, OK! Well, this journal makes it easier to record credit transactions by grouping all sales in one place. 

Apart from that, the recording is more systematic, because every transaction is analyzed from the debit and credit side. Every sale that occurs is also supported by an invoice as proof of the transaction so that it can be traced easily.

Apart from that, the recording format is more concise. Information such as transaction amount, customer name, and cost of goods are recorded in one line without the need to explain long details. 

This certainly saves time and energy, because there is no need to re-record transactions repeatedly. Organized recording also makes it easier to prepare a trial balance. 

All credit transactions have been grouped, so that financial reports can be prepared more quickly and accurately. However, even so, there are challenges, you know!

Challenges in Using a Sales Journal 

Even though it is very helpful, manual recording still carries the risk of errors. If there is an error in recording income, there could be a discrepancy between the sales account and accounts receivable.

As a result, this can affect the balance of the trial balance. In addition, manually recording credit transactions adds to the workload of the accounting team. 

In modern systems, credit transactions can be directly identified from the accounts receivable account, without having to be re-recorded in the sales journal. Discrepancies in record keeping can also cause reconciliation problems.

Of course this has an impact on financial reports. High precision is required in each entry, so that errors do not occur. If there are erroneous recordings, corrections must be made carefully to maintain data accuracy.

Types of Sales Journals

As previously mentioned, sales journals are categorized based on the type of transactions recorded.

1. Cash Sales

Cash sales are usually recorded separately, especially when payments are made using physical cash or credit cards. 

For credit card transactions, the process involves an intermediary, such as a bank, which transfers the funds after deducting administrative fees.

2. Credit Sales

Credit transactions are recorded in a special journal. In this recording, the accounts receivable account increases, while the sales account is recorded as revenue.

3. Sales Discount Journal

Businesses can also record discounts given to customers who make early payments in the sales discount journal.

4. Sales Returns and Allowances Journal

If products are returned or compensation is given for defective items, the recording is done in the sales returns and allowances journal.

In general, these journal entries follow standard accounting principles. However, tax regulations in each country may influence certain details. For example, in a value-added tax (VAT) system, sales tax recording may require an additional journal.

How to Record a Sales Journal

Let's break down how to record a sales journal in a simple way!

1. Ensure the transaction is a credit sale

This journal is specifically for credit sales, not cash sales.

2. Gather essential information

Record the transaction date, customer name, invoice number, and transaction amount accurately.

3. Make the journal entries correctly

• Accounts receivable is recorded as a debit because the business will receive payment later.

• Sales revenue is recorded as a credit since it represents income.

• If the business uses a perpetual inventory system, also record the cost of goods sold (COGS) to reflect stock reduction.

4. Post to the general ledger at the end of the period

Once all transactions are recorded, the total is transferred to the general ledger as part of the financial report.

5. Review before finalizing

Before closing the report, double-check for errors. If any adjustments are needed, use an adjusting journal entry to correct the data.

With systematic and organized recording, financial reports become more accurate, making it easier to manage your business! 

Cash Sales Transactions are Recorded in a Journal

So, after knowing the general meaning, now we will discuss it more specifically, namely cash sales recorded in a journal. 

What does it mean? So, when customers pay directly, cash sales transactions are recorded in a simpler journal than credit transactions. 

The recording format usually includes the transaction date, customer name, amount received, and the cash account involved. Example of cash sales journal:

In the example above, cash increased by IDR 5,000,000 because payment was received immediately. How? You understand, right? Now we move on to discussing credit sales and how to record them.

Credit Sales Journal and How to Record It

For this one, when customers make purchases on credit, the company must record accounts receivable in the sales journal. 

This is useful for knowing the amount that still needs to be billed from customers. So, an example of a credit sales journal:

In this transaction, trade receivables are recorded as assets because the amount still has to be received from customers. Next, let's discuss recording sales returns journals.

Sales Return Journal: How to Record It?

Sales returns occur when customers return goods they have purchased for various reasons, such as damaged goods or not as ordered. 

In this case, the company must record the return so that stock remains accurate and financial reports are not disturbed, for example:

If the customer pays cash, cash is deducted. If the purchase is made on credit, then the accounts receivable are corrected. 

You understand, right? Now the question is, why is the sales journal important?

Read also: How to Calculate and Increase ROI to Maximize Business Potential

Why is a Sales Journal Important?

So, why is this important? Because pAccurate sales journal records have a crucial role in business operations, especially in preparing valid and accountable financial reports. 

Inaccuracies in recording can result in various problems that impact the stability and continuity of the business. Therefore, understanding the importance of correct recording is a vital aspect.

In addition, recording sales journals plays a role in the accuracy of tax calculations. Every company is obliged to report income tax and Value Added Tax (VAT) based on recorded transactions. 

Errors in recording can result in differences in the amount of tax that must be paid, thereby potentially giving rise to sanctions from the tax authorities. Therefore, it is important to take advantage of technology, OK!

Conclusion

From a financial analysis perspective, recording sales journals provides the data needed to assess business performance. This analysis plays a role in business strategy planning, so that companies can adjust policies.

Accuracy in recording sales journals also serves to prevent financial errors. Errors in calculations can have a negative impact on the company's financial stability.

As a result, this leads to an imbalance in the management of assets and liabilities. Oh yes, recording transactions manually can take time and increase the risk of errors. 

Therefore, the use of digital systems such as ESB Core could be the best solution for your business.