Introduction To Sales Books and Sales Return Books
Sales are a crucial aspect when it comes to businesses or organizations. The sales can range from dozens to thousands per day depending on the size of the business or the organization. Hence, it makes sense for maintaining a separate Sales Book and a Sales Return Book.
Sales are a very significant part of all organizations. To understand the concept of Sales in detail let’s have a look at Sales Book and Sales Return Book.
Sales Book: A Sales Book is a Subsidiary Book and hence; Sales Book does not contain a Trade Discount and other details given in the invoice.
Sales Return Book: Sometimes goods sold might be defective or of low quality, hence; the customer may return them. In such cases, goods that are sold and are returned by the customer or buyer are given goods recorded in the Sales Return Book
What Are Sales Books?
The Sales Book is regarded as the subsidiary book which is also called a book of original entry. The Sales Book or the sales day book consists of the records of the all-credit sales of goods or products. On the other hand, a cash book contains the records of the all-cash sales of the goods.
The entries of the Sales Book are made using the net amount of the invoice. Hence, the Sales Book does not have a trade discount. The other such details are found in the invoice.
Each month the total in the Sales Book is noted on the credit side of the sales a/c, which is the ledger a/c. However, the individual accounts of the consumers are posted daily. Furthermore, if the volume of the transaction entries is too huge, the entries in the sales a/c are posted even weekly or fortnightly.
The seller also prepares the invoices in either two or more copies. This invoice consists of the details of the terms of the payments, sales, etc. The Performa of the Sales Book is shown below:
What Are Sales Return Books?
It often happens that the goods that are sold tend to be defective or of lower quality and therefore, the customer would return them. Hence, the Sales Return Book is used to record the goods sold which are returned by the customers. However, the sales returns book is used to record only the goods which were earlier sold on a credit basis.
A credit note is made to prepare each return of the goods and is prepared in duplicate. The credit note consists of the name of the customer, the details of the goods that they have returned, and the reason for the return. Every credit note has a date and is numbered serially. The credit note is regarded as the source document for the entries in the Sales Return Book.
The customer who bought the goods can also prepare a debit note. This is made when the goods are sent back to the seller and hence, is sent to him. The Performa of the Sales Return Book is as follows:
Solved Example
Example:
Record the transactions as follows in the books of M/s. Z and Co. Also, the ledger determines the ledger accounts.
Solution:
In the books of M/s. Z and Co. the entries given below will look like this.
Sales Return Book
The entries, when recorded in the books of the individual traders will look as given below.
MNC Ltd. A/c
D Ltd. A/c
X Ltd. A/c
Sales Return A/c
FAQs on Sales Book and Sales Return Book
1. How are Entries Posted From the Sales Return Book into the Ledger?
Entries from the Sales Return Book are posted into the ledger in the following manner.
Once the Sales Return Book is updated properly and all the entries of the transactions are finished, the total of all the items gets transferred to the ledger in the account known as the sales return account.
At the end of the day every entry gets posted to the credit side of the individual’s account in the debtor’s ledger and this, in turn, helps in keeping the account up to date.
At the end of the month, the sum total of the column called amount gets posted to the general ledger through the following journal entry.
2. How are the Ledger Postings of the Sales Book Done?
Once the transactions are posted in the Sales Book the firm has to post them to their respective ledger accounts. Posting the transactions and bills from the Sales Book to the ledger is quite simple to understand and also carry out.The steps to be followed for posting these amounts from the Sales Book to the ledger account are as follows.
Every entry gets posted at the end of the day to the debit side of the individual account in the debtor’s ledger. This helps in keeping the accounts updated.
The total column is then added at the end of every month and then gets posted to the ledger.
3. What is the difference between a Purchase Book and Sales Book?
Purchases Book is one of the subsidiary books which are used for recording only goods which are purchased on credit. Whereas; Sales Book is one of the subsidiary books which is used to record the credit sale made by the business.
4. What is the main objective of the ledger?
The ledger classifies financial transactions into different subjects (income, expenses, assets, etc.) and makes a permanent record of all the transactions systematically. Trial balance is prepared based on ledger accounts which help to check the arithmetical accuracy of financial records.
5. How is a credit note prepared?
A Credit Note is prepared for every return of goods. It is prepared in duplicate. Each Credit Note is dated and serially-numbered. It is a commercial note which is prepared by the seller and has been issued to the buyer. It acts as a source for a sales return journal.
6. How would you vouch for a sales book and sales return book?
In the Sales Book, only credit sales of goods are recorded. Auditors before vouching for the sales book should check the effectiveness of the system of internal check and control in operation. whereas; Goods that have been sold when returned by the customer on account of poor quality, defectiveness in such cases the auditor should check the voucher carefully for getting an understanding of the number of goods that are returned by the customer.
7. What type of account is a sales return?
Sales returns are a nominal account. It can also be defined as a contra-revenue account as sales returns reduce our sales revenue which means it opposes the revenue account from the initial purchase. One should debit the Sales Returns and Allowances account to show a decrease in revenue.
8. How are Entries Posted From the Sales Return Book into the Ledger?
Entries from the Sales Return Book are posted into the ledger in the following manner. Once the Sales Return Book is updated properly and all the entries of the transactions are finished, the total of all the items gets transferred to the ledger in the account known as the sales return account.
At the end of the day every entry gets posted to the credit side of the individual’s account in the debtor’s ledge and this, in turn, helps in keeping the account up to date.
At the end of the month, the sum total of the column called amount gets posted to the general ledger through the following journal entry.
9. How are the Ledger Postings of the Sales Book Done?
Once the transactions are posted in the Sales Book the firm has to post them to their respective ledger accounts. Posting the transactions and bills from the Sales Book to the ledger is quite simple to understand and also carry out. The steps to be followed for posting these amounts from the Sales Book to the ledger account are as follows. Every entry gets posted at the end of the day to the debit side of the individual account in the debtor’s ledger. This helps in keeping the accounts updated. The total column is then added at the end of every month and then gets posted to the ledger.
