Various books of original entry

1. Source documents
&
Books of original
entry
Section 3
Objective 5

2. Use source documents to make entries into
books of original entry:
• Purchases journal
• Sales journal
• Returns inwards
journal/sales returns journal
• Returns outwards
journal/purchases returns
journal
• Cash book
• Petty cash book

3. • It is important to
prepare accounting
records as they occur.
– Also the
information must be
in chronological
(date)order
• The sequence
(procedure or steps to
follow) is known as
the accounting cycle.

4. • The first two stages of the
diagram below identifies the
process of collecting source
documents
&
• using the information from
the documents and record in
the books of original entry.

5. • The accounting cycle:

6. • Documents used to record in the books of
original entry are linked (matched) to each
other in the table

7. – Purchases
journal
– Sales journal
– Returns inwards
journal
– Returns
outwards journal
– Cash book and
– Petty cash book
Templates of books of original entry

8. – The following details should be recorded in the
journal:
• Transaction date
• Name of the supplier
• Purchase invoice number
• Total amount to be paid on the invoice
Purchases journal: Keeps a record of
credit purchase

9. – Source documents for
making credit entries in
the journal are purchase
invoices
– after the entries are made
the journal is totalled at
the end of the period
– The following are not to
be recorded in the
purchase journal
• Cash purchases
• Purchase of fixed assets
(non-current assets) on
credit

10. Template
• Purchases Journal Page
Date Supplier Invoice
number
Folio Amount due

11. Sales journal:
Keeps a record of credit sales
• the following details are to
be recorded in the sales
journal:
• Date of transaction
• Name of credit customer
• Sales invoice number
• Amount due to be paid

12. – Source documents for
making credit entries in the
journal are sales invoices
– after the entries are made
the journal is totalled at the
end of the period
– The following are not to be
recorded in the sales
journal
• Cash sales
• Sales of fixed assets (non-
current assets) on credit

13. Date Customer Invoice
number
Folio Amount due
Template
Sales journal

14. Returns outwards
& returns inwards journals
• Goods are returned and recorded in
the journals for several reasons:
• When goods are found to be damaged on
receipt
• When the wrong goods were sent out by
the supplier
• When goods ordered were received very
late ( that is, it was received past due the
selling date)
– The source document used for both
journals are credit notes

15. – Returns outwards journal: Returning goods to
a supplier which were previously purchased on
credit
–A business returns goods to the supplier
and then receives a credit note.
–The document indicates how much will be
deducted from the purchase invoice price
Credit notes used for both returns journals
are as follows:

16. – Returns inwards journal: Goods returned by a
customer which were previously sold to that
customer on credit
–The business selling the goods would send
a credit note to customer
–The document states how much will be
deducted from the sales invoice price
Credit notes used for both returns journals
are as follows:

17. Template of
Returns inwards journal
Date Customer Credit note
number
Folio Amount due

18. Template of
Returns outwards journal
Date Supplier Credit note
number
Folio Amount due

19. Cash book
• Some businesses
may use two-
column or three-
column cash
books.
– The following
documents are
used to prepare
both cash books
• Cash register bills
(tapes)
• Cash receipts
• Cash vouchers
• Bank paying
deposit slips or
withdrawals slips
• Cheque
counterfoils
• Bank statements

20. The two column cash
• records information from source
documents
– sets out transactions in date order
– format is presented as a ledger
account
– information shown on the left
hand side of the book represents
receipts (money collected)
– In ‘lay man accounting terms’ the
left side is known as the debit side
– information shown on the right
hand side of journal represents
payments (money paid out)
– The right side using the ‘lay man
accounting terms’ is known as the
credit side

21. Template
of two-cash book

22. Three column cash book
– records information
from source documents
– sets out transactions in
date order
– format is presented as a
ledger account
– additional columns on
either side of the cash
book for discounts
– information shown on
the left hand side of
the book represents
receipts (money
collected)
– information shown on
the right hand side of
journal represents
payments (money
paid out)

23. Template of
three-column cash book

24. Petty cash
– Use to record small cash payments
– Business operates a system called
the imprest system
– The business document used is
known as the petty cash voucher
– The first few columns in the journal
operates as a cash account to
record the amount received for the
imprest, details and payments made
with the relevant voucher number
– Additional columns shown in the
petty cash are used to analyse the
petty cash payments.
– The analysis columns totals are
used to determine the types of
payment to be recorded as
expenses in the general ledger

25. Template of
petty cash book