Accounting for credit sales

Credit sales

 

Credit sales are sales where the product is delivered to the customer but without payment. The customer would pay at a later date agreed.

 

Credit sales will impact of the following accounts

Sales Account – Increases (by the sales amount)

Cost of goods sold – Increases (by the amount to buy or make the product. Example is a Supplier Price)

Inventory Account – Decreases (our products in stock will reduce)

Cash Account - No change (we were not paid)

 

The customer is owing us so we will also create a new account

Debtors or Receivables Account - Increases (by the sales amount)

We can call this Credit Sales Account

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