new business module

KEEPING RECORDS AND MANAGING FINANCES 117
Sales on credit and purchases on credit
Because the cashbook contains only transactions that were
conducted in cash, we need a tool to account for sales and
purchases conducted on credit. The following two forms help
the entrepreneur keep track of transactions on credit.
Sales on credit (see Hand-out 44)
Sales on credit
Name of the customer: Kingsley Midas
Contact information: Dengi Village, Tel. : 333 66 69
Maximum credit line: $7,500
Date Transaction Price Amount paid Outstanding amount Signature
24.5 Sale 50 kg of chicken feed 5,000 1,000 4,000 K. Midas
13.6 Reimbursement 3,500 500 H. Pestalozzi
15.6 Sale 25 kg of chicken feed 2,500 0 3,000 K. Midas
01.7 Sale equipment 4,500 0 7,500 K. Midas
15.7 Reimbursement 4,000 3,500 H. Pestalozzi
31.7 Reimbursement 3,500 0 H. Pestalozzi
Note: One form per customer
Customers sign when they receive the credit to confirm.
The business representative signs when the credit is reimbursed to confirm.
With sales on credit there is always the risk that they will not
be reimbursed. Thus, whenever possible, sales should be made
in cash. Entrepreneurs should only give credit to customers
they know well. They should establish a credit line for each
customer they give credit to and closely monitor repayment.
The “Sales on credit” form helps them do this.
The form also prevents misunderstandings by having the two
parties confirm all transactions: customers receiving credit
confirm their debt with a signature and the entrepreneur confirms
the customers’ reimbursement with a signature. This
prevents disagreements.
Note that an entrepreneur should keep a separate record (i.e.
form) for each customer receiving credit. This way, customers
cannot be mixed up and the customer information is protected,
as only the person mentioned on the form and the entrepreneur
see the amounts.