Sales and Sales Records

7/30/2019 Sales and Sales Records

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Sales and sales recordsChapter 6


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1. Source Documents for Sales and Sales Records

1.1 The Purpose of Sales Invoice: Credit sale

1.2 Copies of Sales Invoice: Main copy to the customer, other copies

remain with the seller

1.3 When are sales Invoices Produced: Along with the goods or with

the person providing the service, or delivery note is sent with goodsand invoice is sent separately then, after the service is provided, and

can be sent before the goods or service is provided.

1.4 Content of a Sales Invoice: Org name, address, contact,

registration #, order #, Customer info, items, qty, unit price, total, grand

total, VAT #, tax, tax point/date, terms 1.5 Settlement Term: Net 3 days, E & OE (Error and Omission

excepted) having the right to amend errors, Ex Works (exclosive

works) means delivery cost is not included in the invoice and must be

paid by customer.


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1. Source ..

1.6 Purpose of a Credit Note: Reverse of Sales invoice, to

show the customers no longers owe money for a certaing

number of items. It is required for returns faulty and

damage, not received, correcting error.

1.7 copies of credit notes: top copy to the customer others

kepped for recordings, accountign, controlling, references.

1.8 when are credit notes produce: customer is dissatisfied

the goods, regain customers goodwill. 1.9 content of a credit note: Company name and contact

info, invoince number, VAT, item #, detail, qty, discount,

subtotal. VAT amount, net paid,


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3. General Principles of VAT and Sales Taxes

UK prospective: when the sales of a business reaches a

certain value it must register for VAT. The business

collects the tax for the government.

The business also gives tax when purchasing the goodsso the business can the amount of tax paid at the time of

purchasing the goods from the tax collected from the

customers.

An International Perspective: VAT is known as SalesTaxthe basic is the same business is collector for the tax. The

rest of the principles for both approches UK and

International.


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3. General Principles of VAT ..

3.1 Basic Calculation of VAT (Sales Tax): when a VAT

registered Co. sells anything to its customers it must

charge its customers VAT normally 17.5

3.2 VAT and Settlement Discount in the UK: VAT ischarged on the amount after the deduction of settlment

Discount amount. It is considered that the customer will

accept the settlement discount term.

3.3 VAT (Sales Tax) requirements VAT invoice: certaininformation must be on the invoice for the purpose of VAT

such as VAT Registration #, Tax Point/Date and Rate of

VAT.


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4. Preparing a Sales Invoice and Credit Note

4.1 Authorizing the preparation of an Invoice: at

appropriate time, after good is delivered, authorized

person should confirm that the goods have been provided.

4.2 Finding Information for a Sales Invoice: fromCustomer Purchase Order, price list sold by the business,

sales order, copy of the price quotation sent to the

customer.

4.3 Checking and Approving a Completed Invoice: Invoiceshould be checked against the order, and make sure all

the required information is provided.


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4. Preparing a Sales Invoice

4.4 Obtaining Details for a Credit Note: is similar to the

invoice preparation. Details of the goods returned is

important, some form of goods returned note is needed to

record detail and the reason for being returned.

4.5 VAT (Sales Tax) on Credit Notes: when a credit note is

issued the amount of VAT payable is also reduced.

4.6 Authorization and Approval of Credit Notes: the credit

note should be prepared by signing or initialing the sourcedocument containing the detail of sales returns.


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6. Books of Prime Entry: Day Books

Sales Day Book

Sales Return Day Book

Purchase Day Book

Purchase Return Day Book

Cash Book

Petty Cash Book

Journal


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7. Sales Day Book

7.1 What does a Sales Day Book look like?

Sales Ledger Account Number

Settlement Discounts

7.2 Analysed Sales Day Book: Analized according ragions,departments, items etc

7.3 Entries in an Analized Sales day Book

Ragion 4 Ragion3

Ragion 2 Ragion1

VAT Total SalesLedgeraccount

Customer Name

Invoice # Date

20000 3500 23500 S2175 ForksLtd 68 15/9/05

VAT Total Sales Ledger account

CustomerName

Invoice # Date


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8. Sales Returns Day Book

Contents:

Date of Credit note

Credit Note Number

Customer Name

Customer Account Reference Number (Ledger A/C)

Credit Note Total Amount\

VAT (Sales Tax)

Sub Total


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9. Function of the Primary Records: PostingTransaction Details to Ledger

Step 1: Periodically totaled daily as the name implies but itcan be weekly or monthly depending on the requirements.Sales Day book lists all the credit sales

Step 2: The totals will be then posted to the ledger which

becomes part of the Double Entry. It will be done asfollowing:

Debit: Debitors (receivables) control account

Credit: Sales account

Credit: VAT (Sales Tax)

Memorandum Accounts: These are the accounts used asshortcuts showing any individual how much owe at any time.

Date post:	14-Apr-2018
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