Besides cash book there are few other subsidiary books to keep accounts in order.
Purchases book
All credit purchases of goods are recorded in the purchases book. ‘Goods’ have mean only those things in which the firms is dealing. These are the articles which are purchased for resale. Purchases book is also known as ‘Invoice Book’ or ‘Purchases Day Book.’
Following transactions are not recorded in the purchases books :
Purchase of Assets : Purchase of assets such as furniture, land, machinery, typewriters are not recorded in the Purchases book. They are recorded in the journal of purchase or credit or in cash book if purchased for cash.
Cash Purchase : Cash purchases are not recorded in the purchases book. These are record in cash book.
Recording of transactions
The entries in this book are made from the invoices bills received from the suppliers of goods.
Invoice
An invoice contains the quality, quantity, brand, rate, amount, trade discount, name of the supplier, number, date etc.
Preparation of the purchases book
Trade Discount : The amount of purchase to be recorded in the purchases book is always arrived at after deducting trade discount.
Sales Tax : The amount of sales tax charged by the supplier of goods is added to the amount of purchases, as it increases the amount of purchases. If trade discount is also given in the question first deduct the trade discount and then calculate sales tax on the balance amount.
Format of Purchases Book
Date Particulars Invoice L.F. Details Amount
No. Rs. Rs.
Particulars column records the make of the supplier and details of items purchased. Detail column records list price of goods less trade discount. Amount column records amount of total goods purchased.
Utilities of purchases book
1. It is easier to check the goods from invoice.
2. Ledger posting becomes easier.
3. It reduces the volume of work required to pass journal entry for each and every credit purchases.
4. It is easier to check the prices of different articles purchased.
5. It is easier to have periodical total of credit purchases.
Purchases returns book
In this journal, goods returned to the supplier are recorded. Sometimes goods purchased are returned to the supplier for various reasons, such as the goods are not of required quality or defective etc. For every return, a debit note (in duplicate) is prepared.
Debit note
A Debit note contains the name of the seller (to whom the goods are being returned), details of the goods returned and the reason for returning the goods. Each debit note is serial numbered and dated. The duplicate copy of the debit note is retained.
Credit note
Credit note is prepared by the supplier of goods on receiving the goods returned by the purchaser. The original copy of the credit note is submitted to the firm whereas duplicate copy is kept for office record. It is called credit note because the purchaser’s account is credited with the amount written in this note.
Entries in the purchases returns book are made on the basis of ‘original credit note’ received from the supplier. Credit note should be numbered and filed properly for future reference.
Format of Purchases Returns Book
Date Particulars Credit L.F. Details Amount Note Rs. Rs.
No.
Sales book
All credit sales of goods are recorded in this journal. Cash sales are recorded in the cash book. Credit sales of things other than the goods are entered in the journal (Proper). Sales book is also known as sales day book.
Recording transactions in sales book
Entries in the sales book are recorded on the basis of sales invoices issued by the firm to its customers at the time of sale. Two or more than two copies of sales invoice are prepared. One copy of the invoice is given to the customer and the other copies are numbered and kept in a file for making entries in the sales book. Sales invoice contains complete information regarding the date, name of the customer, quality, rate, gross amount, trade discount allowed to the customer and the net amount of sales.
Format of Sales Book
Date Particulars Invoice L.F. Details Amount
No. Rs. Rs.
Advantages of Sales book
1. It is easy to find the total of credit sales for each period.
2. Ledger posting becomes easier in the individual personal account.
3. It is easy to check whether the goods have been delivered actually.
4. It reduces the volume of each credit sale by passing journal entry.
5. Careful checking of the goods becomes easy.
6. Prices of quotations and invoice can be checked easily.
Sales returns books
This book is used to record sales returns from customers to whom the goods were sold on credit. On receipt of the goods from the customers, a credit note is prepared, like the debit note for the purchases returns as referred to earlier.
Format of Sales Returns Book
Date Particulars Credit Details Amount
Note Rs. Rs.
No.
Bills receivable book
The sales on credit may be made an open account system or the seller may insist on the buyer to accept the bill for the value of goods purchased. A bill in such a case is bills receivable for the seller, whereas it is bills payable for the purchaser. The bills received duly signed by the buyer are recorded in a separate book which helps in getting full information about those bills.
Bills payable book
Bills payable book is maintained by the acceptor of the bills for credit purchases.
