Subsidiary Books
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SUBSIDIARY BOOKS
Meaning of Special Journals When no. of transactions are large, it is practically impossible to record all the transactions through one journal. To overcome the shortcomings of the use of Journal, the Journal is subdivided into special journals Special Journals refer to the journal meant for specific transactions of similar nature.
Types of Special Journals 1. 2. 3. 4. 5. 6. 7. 8.
Cash Book –Cash and Bank transactions Purchase Book – Credit Purchase of Goods Sales Book – Credit Sale of Goods Sales Return Book – Goods returned by customers (sold on credit) Purchase Return Book – Goods returned to suppliers (purchased on credit) Bills Receivable Book – Bills drawn on customers Bills Payable Book – Bills accepted in favor of suppliers Journal Proper – Transactions not covered elsewhere
PURCHASES BOOK Only CREDIT purchases of goods are to be recorded in this journal. Cash purchases are recorded in cash book. The term ‘goods’ covers only those items that are procured by the business for resale Entries in the purchase book are made on the basis of invoices received from the suppliers with the amounts net of trade / quantity discounts.
Format of Purchases Book PURCHASES BOOK Date Purchase Invoice No.
Name of Supplier
L.F. Details (Rs.)
Amount (Rs.)
Illustration 1: Record the following transactions for the month of July,2006 in the purchases book of M/s Neha Electronics July 5 Purchased from M/s Nelson Electronics 10 Color T.V. @ Rs.7,000/- per pc. 5 flat screen T.V. @ Rs.15,000/- per pc. Trade Discount on all items @ 15% July 20 Purchased from M/s Weston Electronics 5 Weston stereos @ Rs.5,000 per pc. 4 Weston color T.V. @ Rs.14,000 per pc. Trade Discount @ 20%
SALES BOOK Sales Book is used for the purpose of recording the sale of goods on credit. It records neither the cash sales of the goods nor sale of any asset other than merchandise. Entries in the sales book are made on the basis of invoices issued to the customers with the amounts net of trade / quantity discounts.
Format of Sales Book SALES BOOK Date
Sales Invoice No.
Name of Customer
L.F. Details Amount (Rs.) (Rs.)
Illustration 2: Record the following transactions for the month of July,2006 in the sales book of M/s Nayyar Electronics July 4 Sold goods to M/s Ramesh Electronics 10 Philips Iron @ Rs.300 per pc. 15 Philips Mixer @ Rs.1,500 per pc. July 10 Sold to M/s Surbhi Electronics 5 color T.V. @ Rs.12,000 per pc. 10 music system @ Rs.7,000 per pc. July 20 Sold to M/s National Electronics 5 washing machines @ Rs.6,000 per pc. 15 Electric ovens @ Rs.2,000 per pc. It is the practice followed by M/s Nayyar Electronics to allow 10% trade discount on all sales.
Purchase Return Book Used for the purpose of recording the returns of merchandise purchased on credit It records neither the return of goods purchased on cash basis nor the return of any asset other than merchandise. Entries are made on the basis of Debit Notes issued to the suppliers
Format of Purchase Return Book PURCHASE RETURN BOOK Date Debit Note No.
Name of Supplier
L.F. Details (Rs.)
Amount (Rs.)
Illustration 3: Record the following in Purchase Return Book : July 15 Returned 2 washing machines purchased from M/s Manohar Electronics at the list price of Rs.7,000/- per machine less trade discount 20% July 25 Returned 6 tape recorders to M/s Sonika Electronics purchased at Rs.1,000/- per tape recorder
Sales Return Book Used for the purpose of recording the returns of merchandise sold on credit It records neither the return of merchandise sold on cash basis nor the return of any asset other than merchandise. Entries are made on the basis of Credit Notes issued to the customers
Format of Sales Return Book SALES RETURN BOOK Date Credit Note No.
Name of Customer
L.F. Details (Rs.)
Amount (Rs.)
Illustration 4: Record the following in Sales Return Book: July 1 Ramesh & Co. returned 500 units sold @ Rs.50 per unit July 25 Naresh & Co. returned 300 units sold @ Rs.55 per unit
CASH BOOK A Cash Book is a special journal which is used for recording all cash receipts and cash payments Cash Book is both a Journal and Ledger. The Cash Book is a book of original entry since, transactions are recorded for the first time from source documents The Cash Book is a ledger as it is designed in the form of a Cash Account and records Cash Receipts on the debit side and Cash Payments on the Credit Side.
Types of Cash Book Single – Column Cash Book Double – Column Cash Book Three – Column Cash Book Petty Cash Book
Single – Column Cash Book This Cash – book has one amount column on each side. All cash receipts are recorded on the debit side All cash payments are recorded on the credit side
Format of Cash Book Dr. Cr. Particulars Date
Cash Book L.F Amount Date Particulars . (Rs.)
L.F.
Amount (Rs.)
Double – Column Cash Book This Cash – book has two amount columns (one for cash and another for discount) on each side. All cash receipts and discount allowed are recorded on the debit side All cash payments and discount received are recorded on the credit side
Format of Two-column Cash Book Dr. Date Particulars
Cash Book with Discount Column L.F Discou Amoun Date . nt t (Rs.) (Rs.)
Particulars
Cr. L.F. Discou Amou nt nt (Rs.) (Rs.)
Three – Column Cash Book This Cash – book has 3 amount columns (Cash, Bank and Discount) on each side. All cash receipts, deposits into bank and discount allowed are recorded on the debit side All cash payments, withdrawals from bank and discount received are recorded on the credit side 3-Column cash book serves the purpose of Cash Account and Bank Account.
Format of Three Column Cash Book Dr.
Three Column Cash Book
Date Particulars
L.F. Discou Cash Bank nt (Rs.) (Rs.) (Rs.)
Cr.
Date Particulars L.F. Discou Cash Bank nt (Rs.) (Rs.) (Rs.)
Illustration 5:Prepare a Three – Column Cash Book from the following transactions: 2006 Jan.1. Cash Balance Rs.9,000/Bank Balance Rs.11,000/- (Cr.) 3. Paid rent by cheque Rs.3,000/5. Cash received on account of cash sales Rs.3,000/Cash Discount Rs.300/7. Payment for Cash Purchases Rs.1,000/Cash Discount Rs.100/9. Cash Payment for salaries Rs.5,000/12. Received cheque from Mr. X in final settlement and deposited the same in Bank Rs.7,700/15. Received cash from Mr. Y Rs.4,000/Discount Allowed Rs.500/17. Cheque received from Z Rs.2,000/22. Withdrawn from bank for personal use Rs.1,000/24. Cheque received from Z deposited in Bank. 27. Cheque from Z dishonored and returned by Bank 30. Payment of telephone bill by Cheque (including Rs.500/- for residential connection) Rs.2,000/-
PETTY CASH BOOK Petty Cash Book is the book which is used for the purpose of recording the payment of petty cash expenses. Petty Cashier is the person who is authorized to make payments of petty cash expenses and to record them in petty cash book. The petty cash book may or may not be maintained on ‘Imprest System’.
Imprest System The chief cashier estimates the total petty cash expenses for a particular fixed period. The chief cashier advances the estimated amount to the petty cashier in the beginning of the period. The Petty Cashier submits the petty cash book along with supporting vouchers to the chief cashier at the end of the period. The Chief Cashier examines the Cash Book The Chief Cashier reimburses the amount spent by the Petty Cashier. The Petty Cashier again has the same amount of petty cash in the beginning of new period.
Format of Petty Cash Book Petty Cash Book Receipts Date Particul Cash ars Book Folio
Total Date (Rs.)
Payments Particu Vouc Postage Conveya Staff Cartage Printing Miscell Total & aneous Welfare lars her Telegra nce Travellin Station No m Rs.
g Rs.
Rs.
Rs.
ery Rs.
Rs.
Rs.
Illustration 6: From the following particulars, prepare Petty Cash Book on imprest system of Shri Lakshman & Co. for the month of Jan., 2006
Date
Particulars
Jan. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Opening Balance on Imprest System Paid for stamps Paid cleaner charges Paid for fare Paid for office tea etc. Paid for repairs of cycle Paid for advertisement Drew imprest from head cashier
Rs.
JOURNAL PROPER Journal Proper is a residuary book in which those transactions are recorded which cannot be recorded in any other subsidiary book. For example: Opening Entries; Closing Entries; Transfer Entries; Adjusting Entries; Rectifying Entries and Miscellaneous Entries.
Illustration 7: Purchased on credit from Bansal & Co. 2 printers @ Rs.4,500/Returned one printer, being defective, to Bansal & Co. @ Rs.4,500/Sold on credit two old printers to Murli @ Rs.750/Rent due to landlord Rs.2,000/Salaries due to employee Shyam Rs.1,000/-
SUBSIDIARY BOOKS
Meaning of Special Journals When no. of transactions are large, it is practically impossible to record all the transactions through one journal. To overcome the shortcomings of the use of Journal, the Journal is subdivided into special journals Special Journals refer to the journal meant for specific transactions of similar nature.
Types of Special Journals 1. 2. 3. 4. 5. 6. 7. 8.
Cash Book –Cash and Bank transactions Purchase Book – Credit Purchase of Goods Sales Book – Credit Sale of Goods Sales Return Book – Goods returned by customers (sold on credit) Purchase Return Book – Goods returned to suppliers (purchased on credit) Bills Receivable Book – Bills drawn on customers Bills Payable Book – Bills accepted in favor of suppliers Journal Proper – Transactions not covered elsewhere
PURCHASES BOOK Only CREDIT purchases of goods are to be recorded in this journal. Cash purchases are recorded in cash book. The term ‘goods’ covers only those items that are procured by the business for resale Entries in the purchase book are made on the basis of invoices received from the suppliers with the amounts net of trade / quantity discounts.
Format of Purchases Book PURCHASES BOOK Date Purchase Invoice No.
Name of Supplier
L.F. Details (Rs.)
Amount (Rs.)
Illustration 1: Record the following transactions for the month of July,2006 in the purchases book of M/s Neha Electronics July 5 Purchased from M/s Nelson Electronics 10 Color T.V. @ Rs.7,000/- per pc. 5 flat screen T.V. @ Rs.15,000/- per pc. Trade Discount on all items @ 15% July 20 Purchased from M/s Weston Electronics 5 Weston stereos @ Rs.5,000 per pc. 4 Weston color T.V. @ Rs.14,000 per pc. Trade Discount @ 20%
SALES BOOK Sales Book is used for the purpose of recording the sale of goods on credit. It records neither the cash sales of the goods nor sale of any asset other than merchandise. Entries in the sales book are made on the basis of invoices issued to the customers with the amounts net of trade / quantity discounts.
Format of Sales Book SALES BOOK Date
Sales Invoice No.
Name of Customer
L.F. Details Amount (Rs.) (Rs.)
Illustration 2: Record the following transactions for the month of July,2006 in the sales book of M/s Nayyar Electronics July 4 Sold goods to M/s Ramesh Electronics 10 Philips Iron @ Rs.300 per pc. 15 Philips Mixer @ Rs.1,500 per pc. July 10 Sold to M/s Surbhi Electronics 5 color T.V. @ Rs.12,000 per pc. 10 music system @ Rs.7,000 per pc. July 20 Sold to M/s National Electronics 5 washing machines @ Rs.6,000 per pc. 15 Electric ovens @ Rs.2,000 per pc. It is the practice followed by M/s Nayyar Electronics to allow 10% trade discount on all sales.
Purchase Return Book Used for the purpose of recording the returns of merchandise purchased on credit It records neither the return of goods purchased on cash basis nor the return of any asset other than merchandise. Entries are made on the basis of Debit Notes issued to the suppliers
Format of Purchase Return Book PURCHASE RETURN BOOK Date Debit Note No.
Name of Supplier
L.F. Details (Rs.)
Amount (Rs.)
Illustration 3: Record the following in Purchase Return Book : July 15 Returned 2 washing machines purchased from M/s Manohar Electronics at the list price of Rs.7,000/- per machine less trade discount 20% July 25 Returned 6 tape recorders to M/s Sonika Electronics purchased at Rs.1,000/- per tape recorder
Sales Return Book Used for the purpose of recording the returns of merchandise sold on credit It records neither the return of merchandise sold on cash basis nor the return of any asset other than merchandise. Entries are made on the basis of Credit Notes issued to the customers
Format of Sales Return Book SALES RETURN BOOK Date Credit Note No.
Name of Customer
L.F. Details (Rs.)
Amount (Rs.)
Illustration 4: Record the following in Sales Return Book: July 1 Ramesh & Co. returned 500 units sold @ Rs.50 per unit July 25 Naresh & Co. returned 300 units sold @ Rs.55 per unit
CASH BOOK A Cash Book is a special journal which is used for recording all cash receipts and cash payments Cash Book is both a Journal and Ledger. The Cash Book is a book of original entry since, transactions are recorded for the first time from source documents The Cash Book is a ledger as it is designed in the form of a Cash Account and records Cash Receipts on the debit side and Cash Payments on the Credit Side.
Types of Cash Book Single – Column Cash Book Double – Column Cash Book Three – Column Cash Book Petty Cash Book
Single – Column Cash Book This Cash – book has one amount column on each side. All cash receipts are recorded on the debit side All cash payments are recorded on the credit side
Format of Cash Book Dr. Cr. Particulars Date
Cash Book L.F Amount Date Particulars . (Rs.)
L.F.
Amount (Rs.)
Double – Column Cash Book This Cash – book has two amount columns (one for cash and another for discount) on each side. All cash receipts and discount allowed are recorded on the debit side All cash payments and discount received are recorded on the credit side
Format of Two-column Cash Book Dr. Date Particulars
Cash Book with Discount Column L.F Discou Amoun Date . nt t (Rs.) (Rs.)
Particulars
Cr. L.F. Discou Amou nt nt (Rs.) (Rs.)
Three – Column Cash Book This Cash – book has 3 amount columns (Cash, Bank and Discount) on each side. All cash receipts, deposits into bank and discount allowed are recorded on the debit side All cash payments, withdrawals from bank and discount received are recorded on the credit side 3-Column cash book serves the purpose of Cash Account and Bank Account.
Format of Three Column Cash Book Dr.
Three Column Cash Book
Date Particulars
L.F. Discou Cash Bank nt (Rs.) (Rs.) (Rs.)
Cr.
Date Particulars L.F. Discou Cash Bank nt (Rs.) (Rs.) (Rs.)
Illustration 5:Prepare a Three – Column Cash Book from the following transactions: 2006 Jan.1. Cash Balance Rs.9,000/Bank Balance Rs.11,000/- (Cr.) 3. Paid rent by cheque Rs.3,000/5. Cash received on account of cash sales Rs.3,000/Cash Discount Rs.300/7. Payment for Cash Purchases Rs.1,000/Cash Discount Rs.100/9. Cash Payment for salaries Rs.5,000/12. Received cheque from Mr. X in final settlement and deposited the same in Bank Rs.7,700/15. Received cash from Mr. Y Rs.4,000/Discount Allowed Rs.500/17. Cheque received from Z Rs.2,000/22. Withdrawn from bank for personal use Rs.1,000/24. Cheque received from Z deposited in Bank. 27. Cheque from Z dishonored and returned by Bank 30. Payment of telephone bill by Cheque (including Rs.500/- for residential connection) Rs.2,000/-
PETTY CASH BOOK Petty Cash Book is the book which is used for the purpose of recording the payment of petty cash expenses. Petty Cashier is the person who is authorized to make payments of petty cash expenses and to record them in petty cash book. The petty cash book may or may not be maintained on ‘Imprest System’.
Imprest System The chief cashier estimates the total petty cash expenses for a particular fixed period. The chief cashier advances the estimated amount to the petty cashier in the beginning of the period. The Petty Cashier submits the petty cash book along with supporting vouchers to the chief cashier at the end of the period. The Chief Cashier examines the Cash Book The Chief Cashier reimburses the amount spent by the Petty Cashier. The Petty Cashier again has the same amount of petty cash in the beginning of new period.
Format of Petty Cash Book Petty Cash Book Receipts Date Particul Cash ars Book Folio
Total Date (Rs.)
Payments Particu Vouc Postage Conveya Staff Cartage Printing Miscell Total & aneous Welfare lars her Telegra nce Travellin Station No m Rs.
g Rs.
Rs.
Rs.
ery Rs.
Rs.
Rs.
Illustration 6: From the following particulars, prepare Petty Cash Book on imprest system of Shri Lakshman & Co. for the month of Jan., 2006
Date
Particulars
Jan. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Opening Balance on Imprest System Paid for stamps Paid cleaner charges Paid for fare Paid for office tea etc. Paid for repairs of cycle Paid for advertisement Drew imprest from head cashier
Rs.
JOURNAL PROPER Journal Proper is a residuary book in which those transactions are recorded which cannot be recorded in any other subsidiary book. For example: Opening Entries; Closing Entries; Transfer Entries; Adjusting Entries; Rectifying Entries and Miscellaneous Entries.
Illustration 7: Purchased on credit from Bansal & Co. 2 printers @ Rs.4,500/Returned one printer, being defective, to Bansal & Co. @ Rs.4,500/Sold on credit two old printers to Murli @ Rs.750/Rent due to landlord Rs.2,000/Salaries due to employee Shyam Rs.1,000/-
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