Bookkeeping for Credit Sales

When recording credit sales in the accounts these get recorded in the sales day book.

At the end of each month the sales day book gets totalled and the figures transferred into the general ledger accounts using the rules of DEAD CLIC.

If VAT is involved three entries will be recorded rather than two to make the figures balance:

1. The full amount as a debit in the Receivables Ledger Control Account
2. The total amount as a credit in the Sales Account
3. The VAT amount as a credit in the VAT account

In this case the debit equals the value of the sale plus the VAT (the two credits). This illustrates that whilst the number of transactions may not be the same the balance of debits and credits must balance.

Finally, the individual amounts need to be transferred to the receivables ledger for each customer so the owner can see how much each credit customer owes.