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Difficulty: HardSales Journal and Sales Returns Journal

The following transactions occurred in the business of Adebayo Traders during May 2026:

DateTransaction Details
May 4Sold goods listed at ₦200,000\text{₦}200,000 on credit to Ojo, subject to a 15%15\% trade discount and a 5%5\% cash discount if settled within 7 days.
May 10Cash sales of goods to Janet amounting to ₦50,000\text{₦}50,000.
May 15Ojo returned defective goods with a list price of ₦40,000\text{₦}40,000.
May 20Sold old office furniture on credit to Benson for ₦80,000\text{₦}80,000.

What are the correct periodic totals to be entered into the Sales Journal and Sales Returns Journal respectively for the month of May 2026?

  1. Sales Journal: ₦170,000\text{₦}170,000; Sales Returns Journal: ₦34,000\text{₦}34,000Answer
  2. B
    Sales Journal: ₦220,000\text{₦}220,000; Sales Returns Journal: ₦40,000\text{₦}40,000
  3. C
    Sales Journal: ₦250,000\text{₦}250,000; Sales Returns Journal: ₦34,000\text{₦}34,000
  4. D
    Sales Journal: ₦161,500\text{₦}161,500; Sales Returns Journal: ₦34,000\text{₦}34,000

Answer

Sales Journal: ₦170,000\text{₦}170,000; Sales Returns Journal: ₦34,000\text{₦}34,000
The Sales Journal records only credit sales of trading goods net of trade discounts (₦200,000−₦30,000=₦170,000\text{₦}200,000 - \text{₦}30,000 = \text{₦}170,000). Cash sales of ₦50,000\text{₦}50,000 belong in the Cash Book, and the credit sale of office furniture (₦80,000\text{₦}80,000) is a disposal of a non-current asset recorded in the General Journal. The Sales Returns Journal records returned merchandise net of the initial trade discount (₦40,000−₦6,000=₦34,000\text{₦}40,000 - \text{₦}6,000 = \text{₦}34,000).

Step-by-Step Solution

1
Calculate net credit sales for the Sales Journal
Net Credit Sales = ₦200,000−(15%×₦200,000)=₦170,000\text{₦}200,000 - (15\% \times \text{₦}200,000) = \text{₦}170,000
Sales Journal records only credit sales of stock/inventory. Trade discounts are deducted immediately, while cash discounts are ignored at the journal entry stage.
2
Filter out non-qualifying sales transactions
Cash sales (May 10) go to the Cash Book. Furniture sale (May 20) goes to the General Journal.
Cash sales belong in the Cash Book, and sales of fixed assets on credit belong in the General Journal (Journal Proper).
3
Calculate net returns inward for the Sales Returns Journal
Net Sales Returns = ₦40,000−(15%×₦40,000)=₦34,000\text{₦}40,000 - (15\% \times \text{₦}40,000) = \text{₦}34,000
Returned goods must be adjusted for the same trade discount percentage granted at the time of purchase.

Key Concept

Classification of credit transactions and trade discount adjustment in special journals
Estimated Time:2m 0s
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Topics

Sales Journal and Sales Returns Journal

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