General Journal Closing for Sales
(Lansing, MI, USA)
When doing a general journal closing I am supposed to start with sales. Do I subtract sales returns and allowances and discounts in order to close revenue account? Or is that used later? Can you show me an example of a general journal closing for a business who is a wholesaler in the auto parts business, they use cogs, etc...
Thanks for your question Lisa. Yes, you should close off sales returns and transfer the balance of this account to sales. Sales discounts are usually not recorded in their own account (usually the net amount of the sale is simply recorded as the value of the sale in the "sales" account) but if sales discounts are recorded in their own account, you should close this off and transfer the balance to the sales account too. The balance of the sales account will be the final total/net sales for the period. This figure can then go on the P & L.