Distribution and Carriage

This Sales code records income the business earns from distribution and carriage. As an income account, it normally carries a credit balance: credit entries increase the balance (recording new income) and debit entries decrease it (for example, a credit note issued to a customer).

Real-world examples

E-commerce and mail order (flat delivery charge)

An online retailer charges customers a flat delivery fee on top of the product price, regardless of the actual courier cost. Because it's added to a taxable sale, it follows the same VAT rate as the goods themselves — a £6 delivery charge (£5 net, £1 VAT) added to an order is a credit of £5 to 4905 (Distribution and Carriage) and a credit of £1 to 2200 (Sales Tax Control Account), with the combined £6 forming part of the overall debit to 1100 (Debtors Control Account) for the whole order.

Wholesale distribution (recharging actual freight)

A wholesaler delivering to trade customers recharges the actual haulage cost of getting goods to site rather than a flat fee, often itemised as a separate line so customers can see delivery is priced at cost rather than baked into the unit price. A £180 freight recharge (£150 net, £30 VAT) on a delivery is a debit of £180 to 1100, a credit of £150 to 4905, and a credit of £30 to 2200 — the same VAT treatment as the flat-fee example, just tied to the actual cost of that particular delivery.

Commonly confused with

Because code 4904 (Rent Income) sits right next to this one in Sales, it's a common mis-posting target. Code 4905 is specifically for distribution and carriage, while 4904 covers rent income — similar in nature, but keeping them separate is what makes the sales section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

A sale posted to the wrong Sales code won't change total turnover, but it will distort the sales analysis used to see which products, services or channels are actually driving revenue.

Other codes in Sales