Sales Book and Sales Return Book

What is Sales Book and Sales Return Book

Sales are a crucial aspect when it comes to businesses or organisations. 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.

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Sales Book

The Sales Book is regarded as the subsidiary book which is also called as 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:


Date

Invoice No.

Name of the Customer

L.F.

Amount







Sales Return Book

It often happens that the goods that are sold tend to be defective or of a lower quality and therefore, the customer would return then. 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 the 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:


Date

Credit Note No.

Name of the Customer

L.F.

Amount







Solved Example

Example:

Record the transactions as follows in the books of M/s. Z and Co. Also determine the ledger accounts.


Date

Details

5 Aug

Goods returned by M Ltd. (Credit Note No. 2): 

2 bags @ ₹ 500 per piece.

11 Aug

Goods returned by D Ltd. (Credit Note No. 3): 

10 suitcases @ ₹ 2500 per piece. Trade discount of 20%

28 Aug

Goods returned by X Ltd. (Credit Note No. 5): 

5 duffle bags for ₹5000. Trade discount of 10%


Solution:

In the books of M/s. Z and Co. the entries given below will look like this.

 

Sales Return Book

Date

Credit Note No.

Name of the Customer

L.F.

Amount

5 Aug

2

M Ltd.


1000



2 bags @ ₹ 500 per piece.



11 Aug

3

D Ltd.


20000



10 suitcases @₹ 2500 per piece = 25000





Less: 20% T.D. = 5000



28 Aug

5

X Ltd.


4500



5 duffle bags @ ₹1000 per piece = 5000





Less: 10% T.D. = 500



31 Aug


Total


25500


The entries, when recorded in the books of the individual traders will look as given below.


MNC Ltd. A/c

Date

Particulars

Amount

Date

Particulars

Amount




5 Aug

By Sales Return

1000


D Ltd. A/c   

Date

Particulars

Amount

Date

Particulars

Amount




11 Aug

By Sales Return

20000


X Ltd. A/c      

Date

Particulars

Amount

Date

Particulars

Amount




28 Aug

By Sales Return

4500


Sales Return A/c 

Date

Particulars

Amount

Date

Particulars

Amount

31 Aug

Sundries as per Sales Return Book

25500




FAQs (Frequently Asked Questions)

1. How are Entries Posted From the Sales Return Book into the Ledger?

Ans: 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.

2. How are the Ledger Postings of the Sales Book Done?

Ans: 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.

  1. 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. 

  2. The total column is then added at the end of every month and then gets posted to the ledger.