Brilliant Book-keeping

CHAPTER 3

Recording what

you sell

I

n this chapter you will learn how to record sales of a business. We’ll

start with the recording of sales for two reasons: (1) it is a nice easy

introduction and (2) because income from sales is so important to

any business.

Sales can refer to the sale of goods (e.g. a laptop) or the provision of a

service (e.g. repairs to a laptop). I’ll also introduce value added tax. First,

we’ll look at cash sales, then credit sales and finally some further sales-related

transactions. In each section you’ll be shown first how to record sales in a

traditional manual format. Then, you’ll be introduced to the QuickBooks

accounting software for the first time, showing how sales are recorded.

Recording cash sales

Many businesses receive payment immediately for the goods or services

they provide. Some examples would be newsagents, doctors’ practices

and fast-food outlets. When a sale is made and payment received at the

same time, this is referred to as a cash sale.

You might think of cash sales as those where notes and coins are

exchanged, but of course cash sales include many other payment forms,

e.g. debit cards, credit cards, PayPal and any other electronic payment

format. Regardless of the payment format, cash sales are usually lodged

on a regular basis to the business bank account.

In book-keeping terms, for most businesses a cash sale means making

sure the sale is recorded and that a receipt is given to the customer for

the cash received. Cash sales are often recorded using a cash register of

some kind. In most large retail stores, for example, you’ll see that barcode

32 brilliant book-keeping

scanners are linked to cash registers and automatically record the sale,

whereas in some smaller stores, the operator usually has to key in a sale.

Some small businesses may not have a cash reg-

ister, or the volume of cash sales is quite small.

If this is the case, a handwritten receipt can be

used. Ideally, there should be two copies of the

receipt, one for the business and one for the

customer. Figure 3.1 shows an example of such

a receipt.

brilliant

tip

Always issue a receipt for a cash sale. It is a record of the cash received and

provides the customer with proof of purchase.

Figure 3.1 Sample sale receipt

SALE RECEIPT NO. 346

DATE DESCRIPTION AMOUNT

Customer:

John T a ylor, 51 Pa rk St, Southend

Fred’s Fax & Copy Centre,

40 High St,

Northend

23 July 2010

SUBTOTAL

VAT

£50.00

£20.00

£70.00

£12.25

£82.25TOTAL

Binding of promotional brochures

10 reams of A4 paper

ideally, there should

be two copies of the

receipt, one for the

business and one for the

customer

Whether a receipt is handwritten or printed from a cash register it con-

tains a lot of useful information for book-keepers. Looking at Figure

3.1 you can see why. The amount of cash collected is shown, the type of

products sold, the quantity sold, and the VAT charged. A receipt printed

from a cash register would contain similar details. The difference with an

automated system such as a cash register is that the sales for the day are

usually summarised automatically – no need for a calculator to tot up all

receipts. Each sale could also be used to reduce the amount of goods in

stock (see Chapter 7), a task that is easily done once you have some form