Credit Sales Journal Entry Example

Credit sales occur when a company sells goods or services to a customer and allows them to pay at a later date. This is recorded as an accounts receivable in the company's books.

Scenario: Credit Sales Transaction

Assume a company sells goods worth ₹50,000 on credit to a customer. The customer is expected to pay within 30 days.

Journal Entry for Credit Sales:

Particulars	Debit (₹)	Credit (₹)
Accounts Receivable A/c	50,000
To Sales Revenue A/c		50,000
(Being goods sold on credit)

Explanation:

1. Accounts Receivable A/c is debited to record the amount that the customer owes to the company.
2. Sales Revenue A/c is credited to record the revenue earned from the sale of goods.

Summary of Credit Sales Entry

1. Credit Sales:
   • Debit Accounts Receivable A/c
   • Credit Sales Revenue A/c

Detailed Example

Let's assume additional details to provide a more comprehensive example.

Scenario: Sales of Multiple Items on Credit with GST

Assume a company sells the following items on credit:

• Item A: 10 units @ ₹2,000 per unit
• Item B: 5 units @ ₹3,000 per unit

The total sale amount is ₹35,000. The GST rate is 18%.

Calculation:

• Total sales amount: ₹35,000
• GST amount: ₹35,000 * 18% = ₹6,300
• Total invoice amount: ₹35,000 + ₹6,300 = ₹41,300

Journal Entry for Credit Sales with GST:

Particulars	Debit (₹)	Credit (₹)
Accounts Receivable A/c	41,300
To Sales Revenue A/c		35,000
To Output GST A/c		6,300
(Being goods sold on credit with GST)

Explanation:

1. Accounts Receivable A/c is debited to record the total amount owed by the customer, including GST.
2. Sales Revenue A/c is credited to record the revenue from the sale of goods.
3. Output GST A/c is credited to record the GST liability.

Summary of Entry with GST

1. Credit Sales with GST:
   • Debit Accounts Receivable A/c (Total amount including GST)
   • Credit Sales Revenue A/c (Total sales amount)
   • Credit Output GST A/c (GST amount)