Sales Ledgers Explained

Sales ledgers, also known as receivables ledgers, are individual customer accounts outside of the general ledger that record how much each customer owes.

1. What are Sales Ledgers (or Receivable Ledgers)?

A business keeps a record of all the credit invoices it has raised, chronologically, in the sales day book. But since many businesses raise lots of invoices each month, sometimes sending more than one to the same customer, there needs to be a way to track:

  • which invoices have been sent
  • who hasn’t paid their invoices (trade debtors)
  • what information to include on customer statements
  • all customer payments have been recorded in the sales ledger by reconciling them to the sales ledger control account

2. How is a Sales Ledger Updated?

Periodically, customer sales ledgers are updated to record credit sales that they owe money for by recording those sales as a debit in their individual account. Here is an example:

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Sales Ledger Example #1

In the example above, the customer ledger is closed off at the end of November, showing that the balance c/fwd is £350.

Moving forward to December, the opening balance owed by Gee Trading LTD is £350 but on 2 December 2020, a payment is made of £100. Customer payments are recorded as a credit on the sales ledger, reducing the amount owed. At the end of the month, the customer sales ledger is closed off and the balance carried forward is £250. Here’s what the entries look like:

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Sales Ledger Example #2

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.