How to prepare a sales day book

Step by step

1. List each credit sale. Enter the date, customer name and invoice total for every credit sale. Cash sales go in the cash book, not here.
2. Total the day book. Add up the invoice totals for the period to get total credit sales.
3. Post each customer individually. Debit each customer's account in the sales ledger with their invoice total.
4. Post the total to sales. Credit the total to the sales account in the nominal ledger.
5. Check the double entry. The individual debits equal the single credit, keeping the ledger in balance.

Worked example

Three invoices of RM400, RM250 and RM350 give a day book total of RM1,000 credited to sales.

Understanding the method

Posting every credit sale straight into the ledger would be slow and error-prone. The sales day book collects credit sales in date order from the sales invoices. At the end of the period, one total is posted to the sales account.

Only credit sales of goods belong here. Cash sales are recorded in the cash book at the moment the money is received. Sales of items the business does not trade in, such as an old delivery van, are excluded, because this book is for the ordinary revenue of the business.

The figure entered is the invoice total after trade discount but before any settlement discount. Trade discount is a reduction in the agreed price and never appears in the books. Settlement discount depends on the customer paying early, so it cannot be known when the invoice is raised.

In an exam, pick out only the credit sales of goods. If you are given a list price and a trade discount, deduct the discount first.

A list price of RM800 less 25% trade discount enters as RM600. If invoices are out of date order, put them in order.

Here is an example. On the 2nd, an invoice to Lim Trading for RM540. On the 3rd, an invoice to Aina Supplies for RM1,260.

On the 5th, an invoice to Farid Stores for goods with a list price of RM1,000 less 20% trade discount, so RM800 is entered. A cash sale of RM300 on the 4th goes in the cash book. The sale of a surplus display cabinet for RM450 on the 6th is not a sale of goods, so it is left out.

The day book shows RM540, RM1,260 and RM800, a total of RM2,600. Credit RM2,600 to the sales account.

Debit each customer's account with their own invoice total, because each now owes that amount. The individual debits (540 + 1,260 + 800) must equal the single credit of RM2,600.

Common mistakes include including a cash sale and deducting settlement discount at this stage. Another is posting the total to the debit of the sales account (a sale increases a credit-balance account). Others are entering the list price instead of the price after trade discount, and recording the sale of a non-current asset as trading revenue.

If you mix up what goes in the day book and what goes in the cash book, we can help. One of our teachers can sort a mixed list of transactions with you and explain each decision. Book a trial class

Related skills

• How to prepare a purchases day book
• How to prepare a sales ledger control account
• How to post from books of prime entry to the ledger

The methods here are standard accounting practice, with original figures. For your exam board's exact requirements, see exam boards and Sources.