Cash Sales Journal entry is
- Cash transaction
- Doesn’t result in recording Debtors
- Can include Discount GL
Sales are crucial to the success of any business.
Profits and Sales are directly proportional to each other.
Thus, businesses adopt a variety of strategies to increase their sales volume and will always be favorable for Cash Sales.
Who does not like quick realization of their sales amount?
Do you want to see a real-life example?
Online Grocery delivery is becoming more popular.
If you do a prepaid order, e-commerce sites will give you a substantial discount or cash back.
Do you remember seeing a discount for cash on delivery?
The answer will be no, at least in most instances.
The primary reason for offering such a discount is to receive cash instantly.
Furthermore, it validates that the transaction is real. As a result, the delivery charges will not be in vain.
Table of contents
- Cash Sales Journal Entry
- Can we record Accounts Receivable here?
- Cash Sales Journal Entry examples:
- Key Take-Aways:
Cash Sales Journal Entry
The above journal entry does not mean, in a literal sense receiving cash for sales. It means happening of payment immediately.
Businesses are expanding globally, and there is more chance of transactions happening over digital methods. So, we can consider such bank or digital transactions as cash sales. So, rather than debiting cash, we can debit the bank account. However, for ease of understanding, we use cash on the debit side.
Can we record Accounts Receivable here?
Yes, we can record the receivable GL account here. Providing Credit periods to the customers is a customary business practice.
Said differently, Accounts receivable or Notes Receivables happen in the case of credit sales.
However, there is no harm in recording the receivable balance in case of Cash sales.
The Journal entry for credit sales will be
Payment Journal entry for credit sales
Nowadays, digital transactions are increasing. So, there will be credit or debit card payments. It’s also a form of cash sales. Here, there can be a delay in receiving money from the seller. Therefore, business entities record the transaction using the Accounts Receivable GL account to avoid accounting delays.
Cash Sales Journal Entry examples:
Volcano Enterprises is in the business of manufacturing and selling toys. The company has two approaches for sales. They are as follows:
- Sale of Toys @ Rs.2,000 for immediate payments
- Credit Period of 30 days permitted for selling price @ Rs.2,500
Entity sold 200 and 350 Nos to Cool Enterprises for immediate payment and credit sales, respectively.
Cash Sales = 200*2,000 = 4,00,000
Credit Sales = 350*2,500 = 8,75,000
Let us look at the journal entries
Recording both cash and credit sales
Is Sales GL and Revenue GL one and the same?
The short answer is yes.
The Long answer depends on the nature of the business. It makes more sense to use Sales for Manufacturing and trading business. The service industry can use Revenue GL.
Accounting does not have any hard and fast rules. It’s flexible. So, choose the best method depending on the circumstances.
What is a journal entry of cash sales for the amount of Rs.4,500?
The Journal Entry for Cash sales is
What’s the Cash sales 5000 journal entry
Cash Sales 5000 Journal entry is
Are the Cash sales are entered in sales journal?
The purpose of a sales journal is to keep track of all sales transactions, whether cash or credit. So, recording of cash sales happen in the sales journal.
What is journal entry for cash sales Rs.10,000 deposited into bank
If there is no credit period allowed for the customer and payment happens immediately, we can consider it cash sales.
Journal entry for cash Sales Rs.10,000 deposited into the bank is
- Cash Sales are recorded if payment happens immediately
- Cash sales may also include discounts. So, the discount allowed GL account would be part of the transactions.
- Sales returns are not allowed for cash transactions in general. Sellers might be reluctant to refund the already received money. So, we see the majority of returns in the case of credit sales.
The Journal entries for sales return is
We record the cash sales when amount realizes immediately. There isn’t any credit period allowed here. So, the receipt happens either in cash or through any other digital mode (Bank transfer, cheque, debit, or credit cards). We record the cash sales by debiting the Cash & Bank GL and credit the Sales GL account.