Sales as journal entries

Review the journal entry mapping for sales data and its examples

With Sync for Commerce, your merchant can choose to reflect their sales data from e-commerce and point-of-sale (POS) software:

  • as an aggregated daily sales invoice, or
  • as an aggregated daily journal entry.

Codat recommends using journal entries to benefit from these advantages:

  • Ease of use

    Single daily journal entries are easier to manage, adjust, and reconcile than, for example, invoices, payments, and credit notes.

  • Controlled impact on the general ledger

    A journal entry is the most granular way to impact a company's general ledger without being confined to specific account types.

  • Tax data made simple

    Journal entries simplify the recording of tax data because tax rates and their associated accounts do not need to be managed separately.

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View the accounting platforms where we provide coverage for Journal entries.

Choosing a sync type

Your merchant can choose the sync type they prefer while performing their company's configuration for the first time in the Sync Flow. Note that the selection cannot be changed after the initial configuration is complete.

Choosing the sync type in the Sync Flow

Choosing the sync type in the Sync Flow

Example journal entries

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You can map sales journal entries to any account types, including liability, unless it is explicitly prohibited by the target accounting platform.

Sales

The example journal entry covers cash sales and deductions, including orders paid off total of £1000, a tax total of £200, and gratuities/tips of £50.

AccountAccount typeDebitsCredits
CashAsset£1250
Sales / RevenueIncome£1000
GratuitiesIncome or liability£50
VAT / Tax liabilityLiability£200

The example journal entry covers accounts receivable sales, like sales via invoices or "buy now, pay later" sales. This includes an order total of £5500, discounts of £500 from the order total, and a tax total of £1000.

AccountAccount typeDebitsCredits
Accounts ReceivableAsset£6000
Sales / RevenueIncome£5000
VAT / Tax liabilityLiability£1000

Refunds

The example journal entry covers a cash refund with sales tax. This includes a refunded order total of £100 and a tax total of £20.

AccountAccount typeDebitsCredits
CashAsset£120
Sales / RevenueIncome£100
VAT / Tax liabilityLiability£20

The example journal entry covers a refund issued as a credit note. This includes a refunded order total of £200 and a tax total of £40.

AccountAccount typeDebitsCredits
Accounts ReceivableAsset£240
Sales / RevenueIncome£200
VAT / Tax liabilityLiability£40

Daily aggregated sales journal entry

The example journal entry covers payment processing fees and payment fees refunds, including orders total of £1000, tax total of £200, gratuities/tips of £50, payment processing fee of £60, and payment processing refund of £30.

AccountAccount typeDebitsCredits
CashAsset£1220
Sales / RevenueIncome£1000
GratuitiesIncome or liability£50
VAT / Tax liabilityLiability£200
Payment Fee ExpensesExpense£60
Payment Fee RefundsExpense£30

Tax categorization in daily journals

Tax categorization feature is available to every merchant using daily journals, as long as their commerce platform supports tax components. It is aimed at merchants operating in places where products incur multiple taxes remitted to different authorities.

With this feature, the merchant can map multiple tax rates from their commerce solution to relevant tax accounts in their accounting system. It adds an extra screen to the Sync Flow, where the mapping takes place. This creates separate journal lines for the daily journal entry.

Sync Flow user interface displaying the tax mapping step with three sales tax categories with different mappings

Tax categorization step of the Sync Flow


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