Legal Definitions - sales journal

A sales journal is a specific accounting record used by a business to systematically log all sales of goods or merchandise that are made on credit. This means it tracks transactions where customers receive items immediately but are permitted to pay for them at a later date, rather than paying cash upfront. It serves as a crucial tool for businesses to keep track of who owes them money and for what specific goods.

• Example 1 (Retail Business):

  Imagine "The Green Thumb," a local plant nursery, sells a large ornamental tree to a landscaping company. The landscaping company has an established business account and is allowed to pay for purchases within 30 days. The nursery's bookkeeper would record this specific transaction—including the date, the landscaping company's name, the type of tree sold, and the amount due—in their sales journal. This entry ensures the nursery accurately tracks the money owed to them by the landscaping company for the merchandise delivered.

• Example 2 (Wholesale Distributor):

  "Prime Packaging Solutions," a company that distributes bulk shipping materials, ships a pallet of custom-printed cardboard boxes to a large e-commerce retailer. Their agreement stipulates that the retailer has 45 days to pay for the order. Prime Packaging Solutions' accounting department would meticulously enter this transaction into their sales journal, noting details such as the invoice number, the quantity and specifications of the boxes, and the total amount owed. This record is vital for managing their accounts receivable.

• Example 3 (Manufacturing Company):

  "Apex Apparel," a manufacturer of athletic wear, completes and ships a bulk order of custom team jerseys to a university sports department. The university has a standard payment term of 60 days from the invoice date. Upon shipping the jerseys, Apex Apparel's financial team would log this transaction in their sales journal, detailing the university as the customer, the specific merchandise (jerseys) delivered, and the credit terms. This entry allows them to monitor the outstanding payment for the goods sold.