Sales Book: Meaning, Format and Example

Business these days had grown immensely. With the growth of the firms, the number of transactions in the business has also increased. The transactions in a business are of different natures and affect different accounts. So, it is impossible to record all the transactions in one place, i.e., ‘Journal’, which is generally known as the book of original entries. To make the recording of transactions in the books of accounts more effective, journals are sub-divided into many ‘Special Journals’, also known as Day Books, Special Purpose Books, or Subsidiary Books. Different ‘Subsidiary Books’ are prepared to record transactions of similar nature. Thus, the subsidiary books are those books where transactions are recorded first, and then ledger accounts are prepared on their basis.

Sales Book:

Buying and Selling are the two main constituents of a business. Goods are sold by a company on either cash or credit basis. Recording of cash sales and credit sales takes place in different subsidiary books. All the credit sales of goods are recorded in the ‘Sales Book’, whereas all the cash sales of the goods are recorded in the ‘Cash Book’. Importantly, the credit sales of anything other than goods, i.e., assets are directly recorded to ‘Journal’ and not in ‘Sales Book’. 

The following transactions are not recorded in the Sales Book:

1. Cash Sales: All the cash sales of the goods are recorded in the ‘Cash Book’, and not in the ‘Sales Book’.
2. Sale of Assets: Any sale of assets either in cash or credit is not recorded in the ‘Sales Book’.

The entries in the Sales Book are recorded on the basis of the sales invoices issued by the company to its customers at the time of sales. Generally, every company makes a minimum of two copies of the sales invoice. One is to give to the purchaser of the goods, and the other to maintain the internal records and pass respective entries in the Sales Book. Sales invoices contain all the important information related to sales, i.e., date, name of the customer, quantity of the goods sold, rate, gross amount, discount allowed, the tax levied, and the net amount of sales.

Format of Sales Book:

Explanation of the Columns of the Sales Book:

1. Date: This column represents the date on which the sale of goods took place.

2. Particulars: The name of the customer along with the address of the firm, the quantity of goods sold, the rate at which the goods are sold, the discount allowed and tax levied on goods sold are shown in this column.

3. Invoice No.: Invoice no. mentioned on the sales invoice generated at the time of sale is mentioned in this column.

4. Ledger Folio(LF): This column is used to mention the ledger no. of the ledger account in which the entries have been recorded regarding that particular transaction.

5. Details: This column is used to show all the additions and deductions related to the sale of goods, i.e., discount allowed, taxes charged, etc.

6. Sale: The net amount of sales, i.e., Sales less trade discount is shown in this column.

7. Output Central GST (CGST): CGST is charged on those goods which are sold within the state, i.e., the seller and the buyer belongs to the same state. A separate column is made to make entries for CGST. It is calculated on the net sales value, i.e., Sales less trade discount and further shown on the credit side of the ledger account of Output CGST.

8. Output State GST (SGST): SGST is also charged on those goods which are sold within the state, i.e., the seller and the buyer belongs to the same state. A separate column is made to make entries for SGST. It is calculated on the net sales value, i.e., Sales less trade discount and further shown on the credit side of the ledger account of Output SGST.

9. Output Integrated GST (IGST): IGST is charged on those goods which are sold outside of the state, i.e., the seller and the buyer does not belong to the same state. A separate column is made to make entries of the tax collected under IGST.  It is also calculated on the net sales value, i.e., Sales less trade discount and further shown on the credit side of the ledger account of Output IGST.

10: Total: Total amount of every transaction is shown in this column.

Illustration:

Prepare a Sales Book from the following transactions of Sahil Furniture House, New Delhi, assuming CGST @6% and SGST @6%.

Solution:

Sahil Furniture House, New Delhi

Sales Book

Note: 

1. Only credit sales are recorded in the sales book, so the transaction on June 25 will not be recorded in the sales book as it is a cash transaction.
2. Only credit sales of Goods are recorded in the sales book, so the transaction on June 30 will not be recorded in the sales book as it is related to the sale of an Asset.