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
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.
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.
Purchases Return (Returns outward)Book: Purchases Return (Returns outward)Book records the goods returned by the business entity to suppliers.
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
Bills Receivable Book : Bills Receivable Book records the receipts of bills (Bills Receivable).
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 (Account to be credited)
Date
Inward 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
March Purchased from Ojha and sons, Baroda (Invoice no. 1000)
2 laptops @ Rs for office use
March 26 Purchase 10 Mini 500 on cash
Samir K Mahajan

7. PURCHASE BOOK : Example contd.
PURCHASE BOOK/PURCHASE JOURNAL
Date
Inward Invoice Number
Particulars
Name of Suppliers
(Account to be credited)
L.F.
Amount
Details (Rs)
Total (Rs)
2006
March 1
March 7
516
700
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. 150
30000
8000
34200
45150
38000
3800
25000
20000
45000
150
Samir K Mahajan

8. PURCHASE BOOK : Example contd. PURCHASE BOOK/PURCHASE JOURNAL
March 21
909
Patel Enterprise . Surat
each
15 steel Rs each
Less: trade 10%
Add: packing and Delivery Charges
Purchase A/C Dr
15000
22500
34000
37500
3750
33750
250
113350
Notes:
Purchase of laptop will not be recorded in the purchase book, since laptop are assets
Trade discount is allowed on price of goods excluding delivery charges and cartage
Delivery charges and cartage is direct expense, chargeable from purchaser, so added to the amount payable
Purchase on mini chair is cash purchase and hence is not recorded in purchase book.
Samir K Mahajan

9. SPECIMEN FORMAT OF SALES BOOK (Account to be debited)
Date
Outward 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 : Example contd.
SALES BOOK/SALES JOURNAL
Date
Outward Invoice Number
Particulars
Name of Suppliers
(Account to be debited )
L.F.
Amount
Details (Rs)
Total (Rs)
2006
May 4
May 14
175
200
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
840
1040
1215
300
1050
1350
135
Samir K Mahajan

12. Sales BOOK : Example contd. Sale BOOK/Sale JOURNAL
May 21
255
M/S Raaj and Co., Kalupur
10 reams of Rs 60 per ream
less: Trade percent
Sales A/C Cr
600 60
540
2795
Notes:
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.
Sale of furniture will not be recorded
Samir K Mahajan

13. SPECIMEN FORMAT OF PURCHASE RETURN (RETURN OUTWARD) BOOK
Date
Debit Notice Number
Particulars
Name of Suppliers
(Account to be Debited )
L.F.
Amount
Remark
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. PURCHASE Return BOOK : Example contd.
Prepare Purchase return book or return outward book from the following transactions
March Returned to M/S Roy and Co. , Ahmedabad (Debit Notice no. 225)
2 collapsible 2000 each
March Returned to Patel Enterprise, Surat (Debit Notice no. 245)
each
Less trade 1%
March Returned to M/S ABC , Baroda (Debit notice no. 315)
1 steel Almirah of Rs 4000
Samir K Mahajan

15. PURCHASE Return BOOK : Example contd.
Purchase Return BOOK/Return Outward Book
Date
Debit Notice No.
Particulars
Name of Suppliers
(Account to be debited )
L.F.
Amount
Details (Rs)
Total (Rs)
2006
March 4
March 8
March 15
225
245
315
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.
6000 60
4000
5940
13940
Samir K Mahajan

16. SPECIMEN FORMAT OF SALES RETURN (RETURN INWARD) BOOK
Date
Credit Notice Number
Particulars
Name of Customer
(Account to be credited)
L.F.
Amount
Remark
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 CASH 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