Sales Invoices Double Entry Sales are the delivery

Sales Invoices Double Entry

Sales are the delivery or exchange of services or products for a payment from another party. Every business is involved in the delivery of at least one service or involved in the sale of at least one product. Sales are categorised as Cash Sales or Credit Sales have a credit balance in the Trial Balance The sales figure in the trial balance is made up of an accumulation of all the net sales amount that would have occurred in an accounting period. This can be visualized from the illustration to follow.

Imagine you work for J&N Ltd, a company that sells kitchen utensils. The following two Sales Invoices were dealt with in the accounting period.

Double Entry treatment • In accounting for these sales invoices, you will realise that there is an Increase in VAT owed to HMRC Increase in Sales Increase in debtors, since the customers have not yet paid

Hence, the double entry posting will be: Dr: Debtors Cr: Sales Cr: VAT

DEAD/ CLIC • DEAD stands for: • CLIC stands for: • • Debit Expenses Assets Drawings • DEBIT TRANSACTIONS • If any of these are increasing, you will need to debit the account Credit Liabilities Income Capital • CREDIT TRANSACTIONS • If any of these are increasing, you will need to credit the account

Trial Balance Dr Cr £ £ Sales 4, 216. 50 VAT 843. 30 Debtors 5, 059. 80 Totals 5, 059. 80 The total of the debit must equal the total of the credit in a trial balance. This trial balance has been set on the assumption that this is a new business which had only two sales transactions in the accounting period and the customers have not paid for the invoices.

This shows that: • Sales • VAT with the Income (CLIC) was credited with the TOTAL NET AMOUNT Liability (CLIC) was credited TOTAL VAT AMOUNT • Debtors Asset (DEAD) was debited with the TOTAL GROSS AMOUNT

Here at The Training Place of Excellence, we aim at giving people a good understanding of accounts and in doing this; we always try to connect the teaching to the real world.