Sales · Level: Basics
Journal entry: Sale paid straight into the bank
The customer pays by transfer or card at once, so the bank balance rises instead of a receivable.
Worked example
We sell goods to Johnson Ltd for £10,000.00 plus 20% VAT. The amount is paid straight into our bank account.
Correct journal entry
Bank £12,000.00 / Sales £10,000.00, Output VAT £2,000.00
Debit
Bank£12,000.00
Credit
Sales£10,000.00
Output VAT£2,000.00
Why?
- Bank: asset increases → debit
- Sales: income earned → credit
- Output VAT: liability increases → credit
Calculation
- VAT: 20% of £10,000.00 = £2,000.00
- Gross amount: £10,000.00 + £2,000.00 = £12,000.00
Typical mistake
Debiting Trade receivables although the money has already arrived.
Your turn
Three problems on exactly this case, with different numbers. Amounts work with or without separators, e.g. 2,400.00 or 2400.
Transaction
We sell goods to Walker & Co for £1,100.00 plus 20% VAT. The amount is paid straight into our bank account.
Debit
Assets up · expenses · liabilities down
Total debit£0.00
Credit
Liabilities up · income · assets down
Total credit£0.00
Frequently asked questions
What is the journal entry for sale paid straight into the bank?
Example: Bank £12,000.00 / Sales £10,000.00, Output VAT £2,000.00.
How do I recognise this case?
The customer pays by transfer or card at once, so the bank balance rises instead of a receivable.
What is the typical mistake?
Debiting Trade receivables although the money has already arrived.