Subsidiary Books - Non-cash Transaction

Samir K Mahajan
 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
 SUBSIDIARY BOOKS - NON-CASH TRANSACTION

 Day Books
o 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.

o 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.

o Purchases Return (Returns outward)Book: Purchases Return (Returns outward)Book records the goods
returned by the business entity to suppliers.

o 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
o Bills Receivable Book : Bills Receivable Book records the receipts of bills (Bills Receivable).
o Bills Payable Book: Bills Payable Book records the issue of bills (Bills Payable).
Samir K Mahajan
 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
 SPECIMEN FORMAT OF PURCHASE BOOK

Date Inward Invoice Particulars L.F. Amount

Number Name of Suppliers
Details (Rs) Total (Rs)
(Account to be credited)

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
 PURCHASE BOOK : Example

Record the following transactions on purchase book

2006:
March1 Purchases from Purohit Furnishers, Gandhi Nagar (Invoice no. 516)
20 Chairs @ Rs 1500 each
2 Tables @ Rs 4000 each
Less trade discount @ 10%

March7 Bought M/S Roy and Co. , Ahmedabad (Invoice number 700)
20 Stools @Rs. 1250each
10 collapsible chairs @Rs. 2000 each
Delivery and cartage Rs. 150

March 21 Purchased from Patel Enterprise . Surat (Invoice nu. 909)

10 chairs @ 1500 each
15 steel cabinet @ Rs. 1500 each
packing and Delivery Charges Rs 250
Less trade discount @ 10%

March 25 Purchased from Ojha and sons, Baroda (Invoice no. 1000)
2 laptops @ Rs 30000 for office use
March 26 Purchase 10 Mini Chairs @ 500 on cash
Samir K Mahajan
 PURCHASE BOOK : Example contd.

PURCHASE BOOK/PURCHASE JOURNAL

Date Inward Particulars L.F. Amount
Invoice Name of Suppliers
Number (Account to be credited) Details (Rs) Total (Rs)

2006 516 Purohit Furnishers, Gandhinagar

March 20 Chairs @ Rs 1500 each 30000
1 2 Tables @ Rs 4000 each 8000
38000
Less: trade discount @ 10% 3800
34200

March 700 M/S Roy and Co. , Ahmedabad

7 20 Stools @Rs. 1250each 25000
10 collapsible chairs@Rs. 2000 each 20000
45000
Add: Delivery and cartage Rs. 150
150
45150

Samir K Mahajan
 PURCHASE BOOK : Example contd.

PURCHASE BOOK/PURCHASE JOURNAL

March 909 Patel Enterprise . Surat
21 10 chairs @ 1500 each 15000
15 steel cabinet @ Rs. 1500 each 22500
37500
3750
Less: trade discount @ 10%
33750
Add: packing and Delivery Charges 250 34000
113350
Purchase A/C Dr

Notes:
1. Purchase of laptop will not be recorded in the purchase book, since laptop are assets
2. Trade discount is allowed on price of goods excluding delivery charges and cartage
3. Delivery charges and cartage is direct expense, chargeable from purchaser, so added to the amount payable
4. Purchase on mini chair is cash purchase and hence is not recorded in purchase book.
Samir K Mahajan
 SPECIMEN FORMAT OF SALES BOOK

Date Outward Invoice Particulars L.F. Amount

Number Name of Customer
(Account to be debited) 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
 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 pencils @Rs 20 per dozen
14 dozens rubbers @ Rs 60 per dozen

May 14 Sold to Sikh Enterprise, Gandhi Nagar (invoice no. 200)

5 dozens of gum bottles @ Rs 5 per bottle
70 dozens rulers @ 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 paper @ Rs 60 per ream
less: Trade discount @10 percent

May 25 Sold to Gupta enterprise for cash , Chandkheda (Invoice no. 285)
10 dozens pens @ Rs 120 per dozen for cash

May 30 sold old furniture to M/S Patel and Sons, on credit for Rs 17000 (invoice no.300)
Samir K Mahajan
 Sales BOOK : Example contd.

SALES BOOK/SALES JOURNAL

Date Outward Particulars L.F. Amount
Invoice Name of Suppliers
Number (Account to be debited ) Details (Rs) Total (Rs)

2006 175 M/S Dewan Brothers , Ahmedabad

May 4 10 dozens pencils @Rs 20 per dozen 200
14 dozens rubbers @ Rs 60 per dozen 840 1040

200 Sikh Enterprise, Gandhi Nagar

May 14 5 dozens of gum bottles @ Rs 5 per bottle 300
70 dozens rulers @ Rs 15 per dozen 1050
1350
Less: 10% trade discount 135 1215

Samir K Mahajan
 Sales BOOK : Example contd.

Sale BOOK/Sale JOURNAL

May 21 255 M/S Raaj and Co., Kalupur
10 reams of paper @ Rs 60 per ream 600
less: Trade discount @10 percent 60 540
2795
Sales A/C Cr

Notes:
1. 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.
2. Sale of furniture will not be recorded

Samir K Mahajan
 SPECIMEN FORMAT OF PURCHASE RETURN (RETURN OUTWARD) BOOK

Date Debit Notice Particulars L.F. Amount Remark

Number Name of Suppliers
(Account to be Debited ) 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
 PURCHASE Return BOOK : Example contd.
Prepare Purchase return book or return outward book from the following transactions

March 4 Returned to M/S Roy and Co. , Ahmedabad (Debit Notice no. 225)
2 collapsible chair @ 2000 each

March 8 Returned to Patel Enterprise, Surat (Debit Notice no. 245)

4 chairs @ 1500 each
Less trade discount @ 1%

March 15 Returned to M/S ABC , Baroda (Debit notice no. 315)

1 steel Almirah of Rs 4000

Samir K Mahajan
 PURCHASE Return BOOK : Example contd.
Purchase Return BOOK/Return Outward Book

Date Debit Particulars L.F. Amount

Notice Name of Suppliers
No. (Account to be debited ) Details (Rs) Total (Rs)

2006
March 4 225 M/S Roy and Co. , Ahmedabad
2 collapsible chair @ 2000 each 4000

March 8 245 Patel Enterprise, Surat

4 chairs @ 1500 each 6000
Less trade discount @ 1% 60 5940

March 15 315 M/S ABC , Baroda

1 steel Almirah of Rs 4000 4000

Purchase Returns A/C CR. 13940

Samir K Mahajan
 SPECIMEN FORMAT OF SALES RETURN (RETURN INWARD) BOOK

Date Credit Notice Particulars L.F. Amount Remark

Number Name of Customer
(Account to be credited) 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
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 coffee @ Rs 300 per Bag
10 Chests Tea @ Rs. 400 per chest

Jan. 17: Returned by Ankita and Sisters

15 tins Ghee @ Rs 500 per tin

less trade discount @10 percent

Samir K Mahajan
Sales Return (Return Inward ward) Book or Journal : Example

Sales Return Book/ Journal

Samir K Mahajan
 TRADE 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