Cyclopedia of Commerce, Accountancy, Business Administration, v. 04 (of 10)

by American School of Correspondence

46. Sales account takes the place of the credit side of the merchandise account. All sales as shown by the footings of the sales book are credited to the sales account, completing the double entry. All returns and allowances are likewise charged to the sales account. The balance of the sales account shows total net sales.

SAMPLE TRANSACTIONS

47. The following transactions, properly recorded in journal sales book, purchase book, and ledger, demonstrate the uses of the merchandise, purchase, and sales accounts explained in the preceding paragraphs:

—Sept. 20—
Bought from American Furniture Co., Grand Rapids
2 #four-drawer V F cabinets	$11.00	$22.00
4 #35 card sections	4.20	16.80
1 #35 top		1.75
1 #35 base		1.25	$41.80
		———
—21—
Bought from Morgan Printing Co., Chicago
5,000 #1 plain ruled #35 cards	.90	4.50
3,000 #1 ledger " #35 "	1.50	4.50
2,000 #1 " " #46 "	2.00	4.00	13.00
		———
—22—
Sold to Ackers & Co., 224 Randolph St.
4 #35 sections	5.50	22.00
1 #35 top		2.25
1 #35 base		1.75	26.00
		———
—23—
Sold to Thompson & Co., 94 Monroe St.
2,000 #1 plain ruled 35 cards	1.25	2.50
—24—
Received from Ackers & Co.
1 #35 section		5.50
(Damaged)
—25—
Shipped to American Furniture Co.
1 #35 section		4.20
(Received in bad order)

In the first demonstration, the footings of the sales and purchase books, as well as the returns entered in the journal, are posted to a merchandise account. It will be noted that the debit side of the merchandise account does not represent the actual purchases, and the credit side does not represent the sales.

In the second demonstration, the purchase and sales accounts are used. Total sales are credited to sales account from purchase book, and returns credited from the journal. The balances of these accounts show actual net purchases and sales.