Page 89 - Book-keeping for Secondary Schools Student’s Book Form One

Ledgers

Two-stage posting from special journals
An important feature of posting from special journals is that the entries are posted in
two stages, namely posting to subsidiary ledger and posting to the general ledger. These
are illustrated by the subsequent explanation on posting from each special journal that
immediately follows.
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Posting from the sales journal
The sales journal records credit sales of goods to customers. These transactions lead to
the increase in revenue (sales) and increase in assets (trade receivables). Like all the
other special journals, posting entries from the sales journal is done in two stages as
follows:

Stage one: Posting to a subsidiary ledger
Posting to a subsidiary ledger involves posting the entries to the individual accounts
of each customer who appears in the journal. The entries are recorded on the debit
side of the respective accounts (personal accounts of each customer). This is because
the transactions involved are the increases in assets (receivables from each respective
customer).

Stage two: Posting to the general ledger
The general ledger posting involves the periodic (weekly or monthly) record of the total
from the journal. These are posted to the sales account and the trade receivables account
as they represent increases in revenues (sales) and trade receivables, respectively.
Therefore, the trade receivables accounts will be debited, while the sales accounts will
be credited.

The entries made are therefore:

Debit: Trade receivables account
Credit: Sales account

Posting from the sales returns journal
The sales returns journal records returns of goods from credit customers. These
transactions lead to a decrease in revenue (sales are decreased by sales returns) and a
decrease in assets (trade receivables). Like all the other special journals, posting entries
from the sales returns journal is done in two stages as follows:

Stage one: Posting to a subsidiary ledger
Posting to a subsidiary ledger involves posting the entries to the individual accounts of
each customer in the journal. The entries are made on the credit side of the respective
accounts (personal accounts of each customer). This is because the transactions
involved decreases the assets (receivables from each customer).

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