Cambridge O level National O Level Edexcel O Level 7707 Prime Entry books Books of Original Entry Accounting Introduction to Accounting Accounting process

1. Prime Entry Books
Sanjaya Jayasundara
B.Sc.(Finance) Sp.
University of Sri Jayewardenepura, ICASL Finalist,
Investment Advisor, International School Teacher

2. Books of Prime Entry/ Books of Original
Entry
* Introduction
* Sales Journal
* Sales Returns Journal
* Purchases Journal
* Purchases Returns Journal
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3. Introduction
Businesses use books of prime entry to record goods sold on credit,
goods purchased on credit, sales returns, purchases returns and other
transactions. These books are basically listing devices, which mean that
a lot of detail is removed from the ledger. It also means that
bookkeeping can be divided between several people.
Books of prime entry are also known as books of original entry or
subsidiary books. The name of these books has arisen because all
transactions should be recorded in one of these before they are
entered in the ledger.
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4. Transactions can be divided in to two…..
01) Cash Transactions
02) Credit Transactions
• Cash transactions are recorded in cash book and petty cash book.
• Credit transactions are recorded in following prime entry books.
01) Sales Journal
02) Sales Returns Journal
03) Purchases Journal
04) Purchase Return Journal
05) General Journal
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5. Sales Journal / Sales Day Book
Sales Day Book is a prime entry book which can be used to record sales of
goods on credit.
* Source document is sales invoice.
Sales Ledger
Sales Journal A A/C
B A/C
Nominal/General Ledger C A/C
Sales A/C
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Date Name I. LF Amount
1/1 A A/C 2000
5/1 B A/C 3000
20/1 C A/C 4000
31/1 Transfer to Sales A/C 9000
1/1 Sales A/C 2000
5/1 Sales A/C 3000
20/1 Sales A/C 4000
31/1 Debtors 9000

6. Sales Journal
* When goods are sold on credit, debit the customer’s account in the sales
ledger with the total of the invoice (Net amount = Gross amount – Trade
discount) on relevant date.
* At the end of the month the total amount of sales journal should be credited
to the Sales Account in the nominal/General ledger.
 This will now form the double entry for all the individual debit entries in the
sales ledger.
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7. Sales Returns Journal
Sales returns journal (Sales returns book/ Returns inwards journal) is a prime
entry book which can be used to record trade items returned by
debtors/credit customers.
* Source document is credit note.
Sales Returns Journal A A/C
B A/C
Sales Returns Account C A/C
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Date Name c LF Amount
5/1 A A/C 500
8/1 B A/C 1000
27/1 C A/C 1500
31/1 Transfer to Sales
Returns A/C
3000
5/1 Sales Returns 500
8/1 Sales Returns 1000
21/1 Sales Returns 150031/1 Debtors 3000
Sales Ledger
General Ledger

8. Sales Returns Journal
* When goods are returned by a credit customer (Trade Receivable/ debtor) ,
credit the customer’s account in the sales ledger with the total of the credit
note on relevant date.
* At the end of the month the total amount of Returns Inwards Journal should
be debited to Returns Inwards Account in nominal ledger.
* This will now form the double entry for all the individual credit entries in the
sales ledger.
Sanjaya Jayasundara ayojana.lk

9. Purchases Journal /Purchases Day Book
Purchases Day Book is a prime entry book which can be used to record
purchases of trade items on credit .
* Source document is purchase invoice.
Purchases Ledger
Purchases Journal P A/C
Q A/C
Nominal Ledger R A/C
Purchases A/C
C A/C
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Date Name I. LF Amount
2/6 P A/C 5000
9/6 Q A/C 7000
16/6 R A/C 8000
30/6 Transfer to
Purchases A/C
20000
2/6 Purchases A/C 5000
9/6 Purchases A/C 7000
16/6 Purchases A/C 8000
30/6 Creditors 20 000

10. Purchases Journal
* When goods are purchased on credit, credit the supplier’s account
(creditor’s account/Trade Payables Account) in the purchases ledger with the
total of the invoice on relevant date.
* At the end of the month the total amount of purchases Journal should be
debited to the purchases account in nominal ledger.
* This will now form the double entry for all the individual credit entries in the
purchases ledger.
Sanjaya Jayasundara ayojana.lk

11. Purchases Returns Journal
Purchases Returns Journal (Purchases Returns Day Book / Returns Outwards
Journal) is a prime entry book which can be used to record returns of trade
items to suppliers by the business.
* Source document is debit note. Purchases Ledger
Purchases Returns Journal P A/C
Q A/C
Nominal Ledger R A/C
Purchases Returns A/C
C A/C
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Date Name d LF Amount
5/6 P A/C 500
16/6 Q A/C 700
20/6 R A/C 800
30/6 Transfer to
Purchases Ret. A/C
2000
5/6 Purch. Ret. A/C 500
16/6 Purch. Ret. A/C 700
20/6 Purch. Ret. A/C 800
30/6 Creditors 2000

12. Purchases Returns Journal
* When goods are returned to a credit supplier (creditor), debit the supplier’s
account in the purchases ledger with the total of credit note on relevant date.
* At the end of month the total balance of Returns Outwards Journal should
be credit to the Returns Outward Account in the nominal ledger.
* This will now form the double entry to all the individual debit entries in the
purchases ledger.
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13. Summary
• All transactions should be entered in a book of prime entry before they are
entered in the ledger.
• The sales journal is written up from copies of invoices sent to customers
(sales invoices) and the sales returns journal is written up from copies of credit
notes sent to customers.
• The purchases journal is written up from invoices received from suppliers
(purchases invoices) and the purchases returns journal is written up from
credit notes received from suppliers (debit note).
• At the end of each month the totals of the sales, purchases and returns
journals are transferred to the sales, purchases and returns accounts
respectively.
Sanjaya Jayasundara ayojana.lk

14. I wish you an enjoyable learning session…..!
Sanjaya Jayasundara
“The best investment is education.”