journal entry of Sale in Accounting

How to make a journal entry of Sale in Accounting

How to make a journal entry of Sale in Accounting

Before we go further, we have to understand the what are goods. Goods are item which are purchased to be sold .

Sales accounts are made when goods purchase is sold.

Sales account is nominal by nature or some considered it as real account as goods can be feel and touch . So as per nominal account we credit all income and gains and sales are made by adding profit to the goods purchased . suppose we purchase goods for Rs. 400 and sold it for Rs 500 here we are adding profit of Rs 100 therefore sale is generally including profit.


Example Sold goods Rs 500.

Here we are selling goods which we have in business.

Journal entry of the above will be

Cash A/c


   To sales A/c



(being goods sold for cash)


When goods sold and it’s not mentioned how then the other account will be cash accounts as it assumes that goods sold are in cash .


Goods sold by adding profit 10% to its purchase price Rs. 1000.

Note : As we mention earlier goods are sold by adding profit means the goods which we have a value of Rs 1000 and if we add profit to it its value will be Rs 1100.therfore the journal entry of the above will be .

Cash A/c        Dr.


   To sales A/c


(being goods sold for cash)


Journal entry of goods sold on credit .


Its business practice to sold and purchase goods on credit .

Lets take an example here.

Sold goods to Mohan Rs 1000.

In this case we have to open two accounts  Mohan and Sales A/c .

Mohan is Personal account by nature therefore as per Personal Account Mohan is debited because as per personal account  Debit the receiver. Mohan is receiver of goods whereas

Sales is Nominal Account as per Nominal account credit all income and gain and Sales is income here.


Mohan      Dr.


   To sales A/c


(being goods sold to Mohan)


Journal entry of goods sold by cheque.

In Accounting when cheque is used Bank account need to be open .

Example .

Sold goods by cheque Rs 4000.

Note: Now two accounts need to be open sales account. and Bank Account.

Sales Account is Nominal and it’s a income therefore its credited as per rule of Nominal account.

Bank is Personal Account and therefore Debit the receiver therefore Bank is debited in the books of accounts.

Journal entry will be

Bank A/c Dr.


   To sales A/c


(being goods sold by cheque no 1344)

Journal entry of sales return.


Sometime goods sold to party are return by them because of many reason such as goods are defective ,not as per specification and many such reason.

Under such condition we have prepare credit note which is enty of sales return as this credit note is give to the party to show that your accounts is debited in our books and you need not pay for the return goods and the buyer prepare debit note in his book .


Example :


Return goods by Mohan Rs 1000.

Now we have to open two accounts Sales return account and Mohan

Sale return is nominal accounts its our loss as we are not able to made sales and goods are return therefore, we debit Sales return account in our books.

Mohan is personal Account and here Mohan is giver therefore Mohan is credited in the books of accounts.

Journal entry for the above will be .


Sales return  A/c Dr.


   To Mohan


(being goods return by Mohan



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