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Subsidiary Books - Non-cash Transaction Samir K Mahajan.

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1 Subsidiary Books - Non-cash Transaction Samir K Mahajan

2 SUBSIDIARY BOOKS Kinds of Subsidiary Books/special journal/books of primary records/special journal Generally, transactions are of two types: Cash and Credit. On that basis, we have  Subsidiary Books - Non-cash Transaction  Subsidiary Books - Cash Transaction Samir K Mahajan

3 SUBSIDIARY BOOKS - NON-CASH TRANSACTION  Day Books o Purchases Book : Purchases Book records only credit purchases of goods ( goods here means on which the trader s dealing) by the trader. Cash purchases of goods, cash and credit purchases of assets are not entered in this book. o Sales Book: Sales Book is meant for entering only credit sales of goods by the trader. Cash sales, cash and credit sales of assets are not entered in this book. o Purchases Return (Returns outward)Book: Purchases Return (Returns outward)Book records the goods returned by the business entity to suppliers. o Sales Return (Returns inward)Book: Sales Return (Returns inward)Book deals with goods returned (out of previous sales) to the business entity by the customers.  Bill books o Bills Receivable Book : Bills Receivable Book records the receipts of bills (Bills Receivable). o Bills Payable Book: Bills Payable Book records the issue of bills (Bills Payable). Samir K Mahajan

4 SUBSIDIARY BOOKS - NON-CASH TRANSACTION contd. The reasons for the return of goods are i. not according to the order placed. ii. not up to the samples which were already shown. iii. due to damage condition. iv. due to difference in the prices charged. v. undue delay in the delivery of the goods. Samir K Mahajan

5 SPECIMEN FORMAT OF PURCHASE BOOK DateInward Invoice Number Particulars Name of Suppliers (Account to be credited) L.F.Amount Details (Rs)Total (Rs) i. Date Column – Represents the date on which the transaction took place. ii. Particulars Column – This column includes the name of the seller and the particulars of goods purchased. iii. Inward Invoice No. Column – Reveals the serial number of the inward invoice. Inward Invoice are prepared by the seller of goods showing details about goods, its price and other expenses incurred. iv. LF. Column – This column shows the page number of the suppliers account in the ledger accounts. v. Details Column – Reveals the amount of goods purchased and the amount of trade discount. vi. Total Column – This column represents the net price of the goods, i.e, the amount which is payable to the creditors after adjusting discount and expenses if any. Samir K Mahajan

6 PURCHASE BOOK : Example Record the following transactions on purchase book 2006: March1 Purchases from Purohit Furnishers, Gandhi Nagar (Invoice no. 516) 20 Rs 1500 each 2 Rs 4000 each Less trade 10% March7 Bought M/S Roy and Co., Ahmedabad (Invoice number 700) each 10 collapsible 2000 each Delivery and cartage Rs. 150 March 21 Purchased from Patel Enterprise. Surat (Invoice nu. 909) each 15 steel Rs each packing and Delivery Charges Rs 250 Less trade 10% March 25 Purchased from Ojha and sons, Baroda (Invoice no. 1000) 2 Rs for office use March 26 Purchase 10 Mini 500 on cash Samir K Mahajan

7 PURCHASE BOOK/PURCHASE JOURNAL DateInward Invoice Number Particulars Name of Suppliers (Account to be credited) L.F.Amount Details (Rs)Total (Rs) 2006 March 1 March Purohit Furnishers, Gandhinagar 20 Rs 1500 each 2 Rs 4000 each Less: trade 10% M/S Roy and Co., Ahmedabad each 10 collapsible 2000 each Add: Delivery and cartage Rs PURCHASE BOOK : Example contd. Samir K Mahajan

8 PURCHASE BOOK/PURCHASE JOURNAL March Patel Enterprise. Surat each 15 steel Rs each Less: trade 10% Add: packing and Delivery Charges Purchase A/C Dr PURCHASE BOOK : Example contd. Notes: 1.Purchase of laptop will not be recorded in the purchase book, since laptop are assets 2.Trade discount is allowed on price of goods excluding delivery charges and cartage 3.Delivery charges and cartage is direct expense, chargeable from purchaser, so added to the amount payable 4.Purchase on mini chair is cash purchase and hence is not recorded in purchase book. Samir K Mahajan

9 SPECIMEN FORMAT OF SALES BOOK DateOutward Invoice Number Particulars Name of Customer (Account to be debited) L.F.Amount Details (Rs)Total (Rs) i. Date Column – Represents the date on which the transaction took place. ii. Particulars Column – This column includes the name of the customer and the particulars of goods sold. iii. Outward Invoice No. Column – Reveals the serial number of the outward invoice. Outward Invoice are sent to the customer of goods showing details about goods sold and dispatched, its price. iv. LF. Column – This column shows the page number of the customer account in the ledger accounts. v. Details Column – Reveals the amount of goods purchased and the amount of trade discount. vi. Total Column – This column represents the net price of the goods, i.e, the amount which is payable to the creditors after adjusting discount and expenses if any. Samir K Mahajan

10 SPECIMEN FORMAT OF SALES BOOK Enter the following transactions in the sales book of Ojha Enterprise, Ahmedabad 2006 May 4 sold M/S Dewan Brothers, Ahmedabad (Invoice no. 175) 10 dozens 20 per dozen 14 dozens Rs 60 per dozen May 14 Sold to Sikh Enterprise, Gandhi Nagar (invoice no. 200) 5 dozens of gum Rs 5 per bottle 70 dozens Rs 15 per dozen Less: 10% trade discount May 17 Sold news papers for Rs 200 (Invoice 215) May 21 Sold to M/S Raaj and Co., Kalupur (invoice no. 255) 10 reams of Rs 60 per ream less: Trade percent May 25 Sold to Gupta enterprise for cash, Chandkheda (Invoice no. 285) 10 dozens Rs 120 per dozen for cash May 30 sold old furniture to M/S Patel and Sons, on credit for Rs (invoice no.300) Samir K Mahajan

11 SALES BOOK/SALES JOURNAL DateOutward Invoice Number Particulars Name of Suppliers (Account to be debited ) L.F.Amount Details (Rs)Total (Rs) 2006 May 4 May M/S Dewan Brothers, Ahmedabad 10 dozens 20 per dozen 14 dozens Rs 60 per dozen Sikh Enterprise, Gandhi Nagar 5 dozens of gum Rs 5 per bottle 70 dozens Rs 15 per dozen Less: 10% trade discount Sales BOOK : Example contd. Samir K Mahajan

12 Sale BOOK/Sale JOURNAL May 21255M/S Raaj and Co., Kalupur 10 reams of Rs 60 per ream less: Trade percent Sales A/C Cr Sales BOOK : Example contd. Notes: 1.Sales of news paper will not be recorded in sales book as its is cash sales and the firm is dealing in dealing in stationaries and not in news paper. 2.Sale of furniture will not be recorded Samir K Mahajan

13 SPECIMEN FORMAT OF PURCHASE RETURN (RETURN OUTWARD) BOOK DateDebit Notice Number Particulars Name of Suppliers (Account to be Debited ) L.F.AmountRemark Details (Rs)Total (Rs) Note: The entries in the Purchases Returns Book are usually made on the basis of debit note issued to the suppliers or credit note received from the suppliers. We call it a debit note because the party’s (supplier) account is debited with the amount written in this note. Remark highlights the cause of purchase return Samir K Mahajan

14 Prepare Purchase return book or return outward book from the following transactions March 4 Returned to M/S Roy and Co., Ahmedabad (Debit Notice no. 225) 2 collapsible 2000 each March 8 Returned to Patel Enterprise, Surat (Debit Notice no. 245) each Less trade 1% March 15 Returned to M/S ABC, Baroda (Debit notice no. 315) 1 steel Almirah of Rs 4000 PURCHASE Return BOOK : Example contd. Samir K Mahajan

15 Purchase Return BOOK/Return Outward Book DateDebit Notice No. Particulars Name of Suppliers (Account to be debited ) L.F.Amount Details (Rs)Total (Rs) 2006 March 4 March 8 March M/S Roy and Co., Ahmedabad 2 collapsible 2000 each Patel Enterprise, Surat each Less trade 1% M/S ABC, Baroda 1 steel Almirah of Rs 4000 Purchase Returns A/C CR PURCHASE Return BOOK : Example contd. Samir K Mahajan

16 SPECIMEN FORMAT OF SALES RETURN (RETURN INWARD) BOOK DateCredit Notice Number Particulars Name of Customer (Account to be credited) L.F.AmountRemark Details (Rs)Total (Rs) Note: The entries in the sales Returns Book are usually made on the basis of credit note issued to the customers or credit note sent from the customers. We call it a credit note because the party’s (customer’s ) account is credited with the amount written in this note. Remark highlights the cause of sales return Samir K Mahajan

17 Sales Return (Return Inward ward) Book or Journal : Example Enter the following transactions with sales return book : 2006 Jan 9: Returned by M/S Gope and Co. (Credit note: No. 2308) 20 bags Rs 300 per Bag 10 Chests Rs. 400 per chest Jan. 17: Returned by Ankita and Sisters 15 tins Rs 500 per tin less trade percent Samir K Mahajan

18 Sales Return (Return Inward ward) Book or Journal : Example Sales Return Book/ Journal Samir K Mahajan

19 TRADE DISCOUNT Trade discount is an allowance or concession granted by the seller to the buyer, if the customer purchases goods above a certain quantity or above a certain amount. The amount of the purchase made, is always arrived at after deducting the trade discount, ie., only the net amount is considered. For example, if the list price (price prescribed by the manufacturers or wholesalers) of a commodity is Rs.100, and trade discount granted by manufacturer to the wholesaler is 20% then cost price of the commodity to the wholesaler is Rs.80. Trade discount is not recorded in the books. They are used for determining the net price. CASH DISCOUNT Sale of goods on credit is a common phenomenon in any business. When goods are sold on credit the customers enjoy a facility of making payment on some date in the future. In order to encourage them to make the payment before the expiry of the credit period a deduction is offered. The deduction so made is known as cash discount. For example, If Ram purchases goods worth Rs.5,000 on 30 days credit then, as per the terms of contract, he is authorised to make payment 30 days after the date of purchase. If he is offered a cash discount of 2% on payment within 10 days and if he does so, he is entitled to deduct Rs.100 from the invoice price and pay Rs.4,900. In this case Rs.100 is cash discount. But if he does not choose to make payment within 10 days then he will not get any cash discount. In this case he will pay Rs.5,000 after 30 days. Samir K Mahajan


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