Accounting for Credit Sales

What is the purpose of a subsidiary ledger (a type of t-account)?

Records the individual amount owed by the receivables.

How is the subsidiary ledger planned out?

1 The book of prime entry (day book)

2 Double entry in the main ledger, with the total of the gross sales being

recorded in the receivables

3 Subsidiary ledger (just single entry in the individual receivables

accounts).

What is a sales day book?

The sales day book is one of the books of prime entry. It is simply a list of the credit sales invoices that are to be processed for a given period (e.g. a week).

What are the reason for the debits/ credits of this sale?

Debit receivables= £348 is what customers will pay you

Credit VAT= what you owe to HMRC

Credit Sales= you keep the £290

What are sales returned?

If a customer returns a good- invoices will need to be corrected.

(Dr Sales returns- NET

Dr VAT

Cr Receivables- Gross)

What do you put in the cash receipts book?

What does a completed cash receipt book look like?