The Sales Ledger is where we calculate how much is owed to the business by each of its credit customers. Information from the Sales Day Book (“SDB”), the Sales Returns Day Book (“SRDB”) and the Discounts Allowed Day Book (“DADB”) will be posted to the customer accounts in the Sales Ledger as each of these day books record transactions that affect the amount of money that customers owe to the business; i.e.
- The SDB records information from sales invoices issued to credit customers. The gross amount on each invoice represents an increase in the amount owed by the customer to the business
- The SRDB and DADB records information from credit notes issued to credit customers. The gross amount on each credit note represents a decrease in the amount owed by the customer to the business
Information to be posted into the customer accounts of the Sales Ledger
When posting from the SDB, SRDB and DADB to the Sales Ledger we only post information from the Gross (or Total) columns of these day books (note that information from the net and VAT columns will not be posted to the Sales Ledger). In addition, we post the gross amounts from the each invoice and credit note to the customer accounts in the Sales Ledger – we do not post the period totals to this Ledger.
Illustration of the information to be posted to the Sales Ledger
Posting lists & entries in the customer accounts of the Sales Ledger
a) From the Sales Day Book (“SDB”) to the Sales Ledger
When we posted information from the SDB to the General Ledger we posted the gross total of all the sales invoices for the period to the debit side of the Sales ledger Control Account. When posting the from the SDB to the Sales Ledger the gross amount of each invoice will also be recorded on the debit side but this time they will be posted to the customer accounts. Thus the gross amount invoiced to John Smith, for example, would be recorded on the debit side of the John Smith Account in the Sales Ledger.
The postings list for the above example would therefore be as follows:
The above postings list will then be recorded in the customer accounts as shown below. Note that we will record the invoice dates and the invoice numbers next to the gross values recorded in the customer accounts. This way anyone looking at a customer account can trace each entry back to the original financial documents (something that may be required if a customer queries the amount shown as outstanding).
b) From the SRDB to the Sales Ledger
When posting the from the SRDB to the Sales Ledger the gross amount of each credit note will be recorded on the credit side of the customer who has been issued with a credit note.
The posting list for our example will be as follows:
The above will then be posted into the customer accounts as shown below. Note that we will record the credit note dates and the credit note reference numbers next to the gross values recorded in the customer accounts (the postings from the SRDB are shown in blue).
c) From the DADB to the Sales Ledger
The entries from the DADB are posted in the same way as those from the SRDB. The gross amounts will be recorded on the credit side of the customer accounts in the Sales Ledger.
The posting list for our example will be as follows:
The above will then be posted into the customer accounts as shown below. Note that we will record the credit note dates and the credit note reference, or prompt payment reference, next to the gross values recorded in the customer accounts (the posting from the DADB is shown in blue).
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