Journal Entry Distributions—Sales Orders

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Sales order transactions are not posted to the General Ledger. When you invoice the customer for shipped or delivered items included in the sales order, the transaction is posted to the General Ledger in the following manner:

Sales Journal

Transaction

Debits

Credits

Invoice on account

Accounts Receivable*

Sales Income, Freight, and Sales Tax Payable

Credit memo

Sales Income, Freight, and Sales Tax Payable

Accounts Receivable*

*For companies using the cash-basis accounting method, Accounts Receivable is replaced with <Cash Basis> and is not recorded in the General Ledger. Instead, income and cash are recorded when payment is received for the sale.