I’ve previously blogged about day books and analysing the sales or purchases into appropriate columns. Depending on your business and grasp of accounting & bookkeeping, you might leave your record keeping at that. However, to take it to the next step in terms of bookkeeping, a journal is used to take that analysis into the double entry system.
Suppose you have total sales of £5,000, of which £3,000 are for sales of square widgets and £2,000 are for round widgets. The theory is that the overall sales would be posted as a journal as follows:
DEBIT Total debtors account £5,000
CREDIT Sales £5,000
However, a more useful method would be to have a ledger account for sales of square widgets and another one for sales of round widgets, thereby making use of the original analysis in the sales day book. The journal would be as follows:
DEBIT Debtors account £5,000
CREDIT Sales of square widgets £3,000
CREDIT Sales of round widgets £2,000