Subsidiary book, accounts

1. Subsidiary Books
Dr Ahuti S Mishra

2. Primary Books
• Purchase Book
• Purchase Return Book or Return Outward
Book
• Sales Book
• Sales Return Book or Return Inward Book
• Bills Receivables Book
• Bills Payable Book
• Journal Proper

3. Purchase invoices
• Purchase invoices are sent to the buyers of any goods
that have been bought on credit.
• Invoice is a business document or statement giving
details of goods purchased, supplier name, as to their
price, quantities, weight, total value etc.
• Any sales invoice issued by a business is a purchase
invoice when received by the buying business.
• The buyer enters the purchase invoice into a purchase
day book before recording the details using double
entry bookkeeping.

4. Purchase Book
• It records only credit purchases
• Avoids recording cash purchases of goods as
well as cash and credit purchases of fixed
assets.

5. Purchase Book of Mahaveer
Enterprises
Date
2008
April
Name of the Supplier L.F. Inward Invoice
No.
Amount Rs.
02 BYK Ltd. 426 20740
14 Sangita Enterprises 1407 2100
17 Gadgil and Sons 1607 4800
18 Raghunath and Co. 2701 17500
Total 45140

6. Writing of Purchases Book
Record the following transactions in Purchase Book for
February, 2008.
• 1 Purchased goods from Ashok and Co. Rs2500 as per
inward invoice No 9
• 6 Bought goods from Suresh Rs1000 less 10% Trade
discount as per inward invoice No 10
• 17 Bought goods for cash from Sunil worth Rs950
• 18 Surinder invoiced goods to us Rs800 less 5% Trade
Discount as per Inward Invoice No11
• 25 Purchased Machinery from Bahu Co. Rs1000 as per
Invoice No 20.

7. Purchase Book
Date
2008
February
Name of the Supplier L.
F.
Inward Invoice
No
Amount Rs.
1 Ashok and Co. 9 2500
6 Suresh (Rs1000-Rs100) 10 900
18 Surinder (Rs800-Rs40) 11 760
4160

8. Posting of Purchases Book
Ledger Posting
Purchase Account
Date
2008
Feb
Particulars J.F. Amount
Rs.
Date
2008
Feb
Particulars J.F. Amount
Rs.
29 To Sundries as per
Purchase Book
4,160

9. Ashok and Co. Account
Date
2008
Feb
Particulars J.F. Amount
Rs
Date
2008
Feb
Particulars J.F. Amount
Rs
1 By Purchases A/c 2,500

10. Suresh Account
Date
2008
Feb
Particulars J.F. Amount
Rs
Date
2008
Feb
Particulars J.F. Amount
Rs
6 By Purchases A/c 900

11. Surender Account
Date
2008
Feb
Particulars J.F. Amount
Rs
Date
2008
Feb
Particulars J.F. Amount
Rs
18 By Purchases A/c 760

12. Purchase Return Book or Return
Outward Book
• The subsidiary book is used to record the goods
purchased on credit and sent back to creditors or
suppliers because they do not conform to specification
or for some other reason.
• Debit Note- When a businessman purchases goods on
credit, he gives credit to the supplier’s a/c. when such
goods are returned, supplier’s credit must be reduced
to that extent. To decrease supplier’s credit,
businessman debits supplier’s a/c with that amount
and sends him a note informing that his a/c has been
debited to that extent, such note is known as debit
note.

13. Purchase Return Book of Mahaveer
Enterprises
Date
2008
April
Name of Supplier L.
F.
Debit Note No. Amount Rs.
20 Sangita Enterprises 21 700
27 Gadgil & Sons 22 900
1600

14. Writing of Purchase Returns Book or
Returns Outward Book
Enter the following transactions in Purchase
Returns Book for March,2008
• 6 Returned goods to Anil and Co. Rs5000 as
per Debit Note No 18
• 20 Sunil and Co. received goods returned by
us Rs2000 as per debit note no 19
• 26 Returned goods to Manish Rs500 as per
Debit Note No 20

15. Purchase Return Book
Date
2008
March
Name of the Supplier L.F. Debit Note No. Amount Rs.
6 Anil and Co. 18 5000
20 Sunil and Co. 19 2000
26 Manish 20 500
7500

16. Posting of Purchase Return Book
LEDGER
Purchase Return Account
Date
2008
March
Particulars J.F. Amount
Rs
Date
2008
March
Particulars J.
F.
Amount
Rs
31 By Sundries as
per Purchase
Return Book A/c
7,500

17. Anil and Co. Account
Date
2008
March
Particulars J.F. Amount
Rs
Date
2008
March
Particulars J.
F.
Amount
Rs
6 To Purchase
Return A/c
5,000

18. Sunil and Co. Account

19. Manish Account

20. Sales Book
Specimen of Sales Book
Sales Book of Mahaveer Enterprises
Date
2008
April
Name of the Customer L.F. Outward
Invoice No.
Amount Rs.
3 Bhalchandra Corporation 2001 14700
8 Vinayak Enterprises 2002 13835
16 Heramba Traders 2003 15700
20 Morehwar and Co. 2008 13100
Total 57335

21. Writing of Sales Book
Enter the following transactions in Sales Book and
make ledger posting of the same for January 2008
• 4 Sold goods to Madhav Rs5400 @20% Trade
discount Invoice No.13
• 8 Sold machinery to Wani Rs10000 @ 5% Trade
Discount.
• 20 Sold goods for cash to Shriram Rs900.
• 25 Sold goods to Shridhar Rs950 Invoice No14
• 29 Sold goods to Shridhar Rs860 Invoice No.15

22. Sales Book
Date
2008
January
Name of the Customer L.F. Outward
Invoice No.
Amount Rs.
4 Jadhav (Rs5400-Rs1080) 13 4320
25 Shridhar 14 950
29 Shridhar 15 860
Total 6130

23. Ledger Posting
Sales Account
Date
2008
Jan
Particulars J.F
.
Amount
Rs
Date
2008
Jan
Particulars J.F. Amount
Rs
31 By Sundries as per
Sales Book
6130

24. Madhav Account
Date
2008
Jan
Particulars J.F. Amount
Rs.
Date
2008
Jan
Particulars J.F. Amount
Rs.
4 To Sales A/c 4320

25. Shridhar Account
Date
Jan
2008
Particulars J.F. Amount
Rs.
Date
2008
Jan
Particulars J.F. Amount
Rs.
25
29
To Sales A/c
To Sales A/c
950
860

26. Sales Return Book or Return Inward
Book
Goods Sold to customers maybe returned by
them for the following reasons:
• Goods are not according to the specifications
• Goods are of inferior quality
• Goods are damaged in transit
• Goods are more than ordered.

27. Credit Note
• When a businessman receives such goods
from his customers along with debit note, a
note is sent to the customer (called as credit
note).
• All the entries regarding such returns are
recorded in sales return book.

28. Specimen of Sales Return Book
Sales Return Book of Mahaveer
Enterprises
Date
2008
April
Name of the Customer L.F. Credit Note No. Amount Rs.
11 Bhalchandra Corporation 09 670
23 Vinayak Enterprises 10 200
27 Heramba Traders 11 340
Total 1210

29. Writing of Sales Return Book
• 2 Mohan returned goods to us Rs1000 as per
credit note No.103
• 10 Gadgil and sons returned goods to us
Rs150 as per Credit Note No. 104
• 5 Received goods Rs275 returned from Sharad
and Co. as per Credit Note. No.105

30. Sales Return Book
Date
2008
June
Name of the Customer L.F. Credit Note No. Amount Rs.
2 Mohan 103 1000
10 Gadgil and Sons 104 150
15 Sharad and Co. 105 275
Total 1425

31. Posting of Sales Return Book
Sales Return Account
Date
2008
June
Particulars J.F. Amount
Rs.
Date
2008
June
Particulars J.F. Amount
Rs.
30 To Sundries as per
sales Returns Book
1425

32. Mohan Account
Date
2008
June
Particulars J.F. Amount
Rs.
Date
2008
June
Particulars J.F. Amount
Rs.
2 By Sales Returns
A/c
1000

33. Gadgil and Sons Account
Date
2008
June
Particulars J.F. Amount
Rs.
Date
2008
June
Particulars J.F. Amount
Rs.
10 By Sales Return
A/c
150

34. Sharad and Co’s Account
Date
2008
June
Particulars J.F. Amount
Rs.
Date
2008
June
Particulars J.F. Amount
Rs.
15 By Sales Returns
A/c
275

35. Bills Receivables Book
• The bills receivables of a firm consist of all bill
of exchange accepted by customers in respect
of amount due from them. These are recorded
in the bills receivables books.

36. Specimen of Bills Receivable Book
Bill Receivables Book of Mahaveer
Enterprises
Sr.
No.
Date
2008
From
whom
Received
Name of
the
Acceptor
Date
of
Bill
2008
Term
Days
Date of
Maturity
Where
Payable
Amount
Rs.
How
Dispose
d
1 April
24
Mahesh
& Co
Mahesh
& Co
April
20
90 July 22 BOB,
Nasik
13100 Discount
ed with
banker
on
27.4.200
8
2 April
27
Shankar
& Co
Shankar
& Co
April
23
60 June25 BOI 11700
Total 24800

37. Bills Payable Book
• It consists of all bills of exchange accepted by
the business in respect of amounts owing to it
suppliers. All such bills of exchange are
recorded in bills payable books.

38. Specimen of Bills Payable Book
Bills Payable Book of Mahaveer
Enterprises
Sr.
No.
Date
2008
Name of
the
Drawer
Payee Date
of
Bill
2008
Term
Days
Date of
Maturity
Where
Payable
Amount
Rs.
Remarks
1 April
20
Sangita
Enterpris
es
Sangita
Enterpris
es
April
20
90 July 22 PNB ,
Sangli
1400
2 April
20
Raghuna
th & Co.
Raghunat
h & Co.
April
18
90 July20 PNB,
Sangli
17500
Total 18900

39. Bills of Exchange
• A bill of Exchange is an order in writing by the
creditor to the debtor to pay the amount
specified there in, on the specified date called
due date.
• It is drawn by the creditor and accepted by the
debtor.

40. Journal Proper
• Opening entries
• Closing entries
• Transfer entries
• Rectification of entries
• Adjusting entries
• Entries related to dishonour of cheques
• Entries related to dishonour of bills

41. Opening entry is passed at the beginning of every year to
brought forward the balances of personal and real accounts
appearing in the last year’s Balance Sheet.
Balance Sheet of Vinay as at 31st March ,2008
Liabilities Rs. Assets Rs.
V’s Capital A/c 60,000 Cash A/c 1,000
Creditors 15,000 Stock A/c 11,000
Bank Overdraft 5,000 Land and Building A/c 40,000
Debtors A/c 4,000
Plant and Machinery A/c 20,000
Furniture A/c 4,000
80,000 80,000

42. The opening entry for the same can be passed as
follows:
In the books of Vinay
Journal Proper
Date
2008
April
Particulars L.F. Debit
Rs.
Credit
Rs.
1 Cash A/c Dr. 1,000
Stock A/c Dr. 11,000
Land and Building A/c Dr. 40,000
Debtors A/c Dr. 4,000
Plant and Machinery A/c Dr. 20,000
Furniture A/c Dr. 4,000
To V’s Capital A/c 60,000
To Creditors A/c 15,000
To Bank Overdraft A/c 5,000
(Being last year’s balances brought forward)

43. Closing Entry
• At the end of the financial year final account
are prepared. Accounts relating to goods such
as opening stock, purchases, sales, return
inwards, return outwards and direct expenses
(eg..carriage inward, wages, power, coal and
coke) are transferred to Trading Account by
passing closing entry. All nominal accounts
indicating expenses and income are
transferred to P&L account and for this
purpose a closing journal entry is necessary.

44. The following balances appeared in
the ledger of Amol as on 31-03-2008:
Debit Balances Rs. Credit Balance Rs.
Opening Stock 1,00,000
Purchases 4,00,000
Wages 1,50,000
Manufacturing Expenses 50,000
Sales 10,00,000
Administrative Expenses 1,00,000
Advertisement Expenses 50,000

45. In the books of Amol
Journal Proper
Date
31st
March
Particulars L.F
.
Debit Rs. Credit Rs.
31 Trading A/c Dr. 7,00,000
To Opening Stock A/c 1,00,000
To Purchases A/c 4,00,000
To Wages A/c 1,50,000
To Manufacturing Expenses A/c 50,000
(Being the transfer of balances to Trading A/c)
31 Sales A/c Dr. 10,00,000
To Trading A/c 10,00,000
(Being the transfer of Sales to Trading A/c)
31 Profit and Loss A/c Dr. 1,50,000
To Administrative Expenses A/c 1,00,000
To Advertisement A/c 50,000
(Being the transfer of balances to Profit and Loss
A/c)

46. Transfer Entries
In the books of Amar
Journal Proper
Date Particulars L.F Debit Rs. Credit Rs.
A’s Capital A/c Dr. 5,000
To A’s Drawings A/c 5,000
(Being the transfer of A’s Drawings to A’s Capital
A/c)

47. Cash Book
• A Cash book is a specific journal which is used
for recording all cash receipts and cash
payments.
• In actual practice businessman prepares Cash
Book without passing journal entries. Such a
system of maintaining books of accounts is
called practical system of Book-keeping.
• Cash Book is both Journal and Ledger.

48. Specimen of Cash Book/ Cash Register
Simple Cash Book for ………..
Receipts Payments
Date Receipt
No.
Particulars L.F. Amount
Rs
Date Voucher
No.
Particulars L.
F.
Amount
Rs.
Total Total

49. Specimen of Cash Book with Cash and
Bank Columns
Two Column Cash Book for ………..
Receipts Payments
Date Recei
pt
No.
Particula
rs
L.
F.
Cash
Rs
Bank
Rs
Date Vouc
her
No.
Particul
ars
L.
F.
Cash
Rs
Bank
Rs.
Total Total

50. Guidelines for two column Cash Book
• If a cheque is received by the proprietor it is treated as Cash and
Cash A/c is debited.
• If a cheque received by the proprietor is paid into the bank on the
day of receipt, Bank A/c is debited as Bank is receiver.
• If a cheque is dishonored the other accounts to be debited or
credited is the party who issued the cheque or the respective
Nominal Account associated.
• If a cheque is received by the proprietor and endorsed to other
party is dishonored, no entry is to be passed in Cash book. A journal
entry will be passed or reverse entry maybe passed to cancel the
effect of original entry.
• Contra Entries- If cash is paid into bank, Cash a/c is credited and
bank A/c is debited and vice versa. “C” is written in the LF column.
• Cash is real A/c and Bank is personal A/c.

51. Specimen of Cash Book with Cash,
Bank and Discount Columns
Three Column Cash Book for ………..
Receipts Payments
Dat
e
Rec
eipt
No.
Particu
lars
L.
F.
Disc.
Allw
d Rs.
Cash
Rs
Bank
Rs
Dat
e
Vou
che
r
No.
Particu
lars
L
.
F
.
Disc.
Rcvd
. Rs.
Cash
Rs
Bank
Rs.
Total Total

52. Guidelines for three column Cash Book
• Only the Cash and Bank Column are to be
balanced. Discount Columns are to be totalled
and posted to the Discount A/c in the Ledger.
• Narration has to be written after recording each
entry.
• When a business is running an overdraft the
balances in his cash Book in th bank column will
appear on the payment side as “By Balance b/d”
and not on the receipts side as in the case of a
favorable balance.