The Sales Journal
It stands to reason with the advent of the purchases journal, a sales journal would logically be included. The entries recorded in this special journal would be all sales of merchandise on account. This would setup a receivable which eventually would lead to the actual receipt of cash (again, most roads eventually lead to cash). Therefore the cash receipts department could be expanded to book all sales of merchandise on account since they will ultimately be receiving cash. The sales journal would be used to record such sales instead of using the general journal for such activity. This is referred to as the accounts receivable cycle. Again, you are imagining the general journal getting still smaller. In fact, the only entries recorded in the general journal will be the purchases or sales of assets and the adjusting and closing entries.
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- John Templeton, HCCS Accounting Instructor
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