What is Sales Day Book?
Sales Day Book is termed as a manual ledger that provides elaborative information on credit sale made by a sales person to the customer and documents the customer name, invoice number, date of invoice and the amount of invoice.
Explanation
The sales day book can be classified as a manual ledger documenting detailed information on sales made by a salesperson to the customers for a given business day. It would document information on customer name, invoice date, unique invoice number, and the amount of credit sale made on that day. The information so collated for a given business day is then moved to the sales ledger.
A sales ledger, therefore, can be termed as the collection of daily sales day books. It is utilized in manual reporting of sales information. It can also be defined as a sales register. These books are reconciled every month, and the management then analyses the effective amount. It is also regarded as a book of credit sales or sales journals or sold books.
It is an intermediate or subsidiary book. The overall sales as maintained are then updated on the sales ledger after the end of the month. Since the transactions happen on credit sales, there is a need for a sales day book to record such transactions. It is classified as a special journal, and it records all non-cash transactions with respect to the sales.
It is recorded in chronological order, and hence it allows the business to account for all transactions easily and in an effective manner. With respect to the audit perspective, these documents become critical, and they facilitate the segregation of duties.
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Format
The sales day book format consists of invoice date or date of credit sales followed by a description of sales or particulars with customer name, invoice amount, and amount on credit sales.
The following is the excel format –
Example of Sales Day Book
Let us take the example of ABC Company. The business made a credit sale of $200 to X customer on 06/17/2020. It additionally made credit sales to customer Y and Z of $300 each on 06/18/2020. Help the management prepare the sales day book for 06/17/2020 and 06/18/2020.
06/17/2020, it would look as shown below –
On 06/18/2020, it would look as shown below –
Which Sales are Recorded in Sales Day Book?
The sales day book records credit sale transactions and not cash-based sales transactions. The credit sales transactions are transactions wherein the customers or the buyer or the purchaser of the services are permitted to pay the business of their services offered later rather than making payment on the purchase day itself. Such transactions allow the purchaser or buyer or customer to take up adequate time on making payments.
Therefore, to account for such transactions, the business and salesperson maintain a sales day book that will document customer name, invoice number, sales amount, and credit sale date. Such books are maintained daily. The amount so recorded in the book is totaled monthly.
The sales that are achieved on a cash basis are never recorded in the sales day book. The sales on a cash basis are maintained in the cash book. The sales book would not record any asset sale or investment sale on credit. Such transactions are recorded in the journal books and not in the sales book. Only sales of finished products that too on credit are updated on the sales book.
Importance
The sales day book is an important document as it allows the business to track down the sales made on credit daily. Therefore, the book is a critical document for the business that are of small to medium sizes. As these entities are dependent on converting each sale from credit to cash, this document fills up the need to account for all credit sales transactions that tend to happen daily. On the basis of reconciliation, small to medium-size businesses can follow up with their customers to facilitate collection.
Advantages
- It helps in recording credit sales daily.
- This document helps to identify customers from which whom they still anticipate cash.
- It helps driving accountability for small-sized as well as medium-sized businesses.
- Helps in monthly reconciliation with the sales ledger.
- It enables segregation of duties as well as provide sales information is summarized and understandable form.
- They help in the collection of information at a granular level.
Conclusion
The sales day book is regarded as the book that documents the salesman’s credit sales to the customers. It mentions the customer name, invoice number, invoice date, and the sales amount. It is reconciled monthly, wherein credit sales at the end of each business day and totaled to arrive at the effective credit sales value.
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