Purchases journal

 The Purchases journal is also known as the Purchases day book.

 The diagram below shows the structure of the Purchases Journal.

Purchases Journal
Date Details Purchases Invoice No Folio Amount
Debit Credit
$ $

 The Purchases Journal is drawn from the purchases invoices to calculate

total credit purchases to be posted to the ledger.
 It is a subsidiary book that is used to record credit purchase transactions
of goods in trade.
 Credit buying or purchases is when suppliers give businesses an option
of paying for goods and services they purchase at a later date instead of
upfront. This means that one can use the goods or services before paying
for them.

Reasons for buying goods on credit

At times suppliers take up the decision to sell goods on credit because;

 It allows the business to obtain stock of goods even when experiencing

cash flow problems.
 If a business buys on credit then it can raise the funds to pay for the
stock at a later date.
 It reduces pressure on the business since it allows the business to
stock up since the full amount is not required.

Uses of the Purchases Journal

 The purchases day book is used to:
 Record the credit purchases of goods in trade.
 Show the reference of the purchases invoice for that respective
transaction.
 Show the reference of a transaction to the purchases ledger.
 Show the names of regular suppliers.
 Highlight the dates at which transactions took place.
 Indicate the total of the credit purchases that occurred in a period of
time which is the amount owed to creditors.

Note

Cash purchases and the purchase of fixed assets whether on cash basis or
credit basis are not recorded in this book.

The columns of the Purchases Journal

Purchases Journal
Date Details Purchases Invoice No Folio Amount
Debit Credit
$ $

Date column

 It is used for recording the respective dates on which transactions took

place in their chronological order.

Details or Particulars column

  It is used for recording the details pertaining to the transaction, that is
the name of the supplier (creditor) from whom the purchases have
been made.

Purchases invoice number column

 It is used for recording the serial or reference numbers on the

purchases invoices (for the respective transaction).

Folio column
 This is used for recording the reference page of the transaction in the
purchases ledger.

Amount column

 It is used for recording the total amount of credit purchases of a

transaction and the total of all credit purchases.

Recording and interpretation of transactions in the purchases

journal

 When making entries in the Purchases Journal entries are recorded on

the credit column of the Purchases journal and their total will be
recorded on the debit column with a narration, “Transfer to debit
purchases account” and is dated the last date of that month.
 The narration, “Transfer to debit purchases account” shows that the
total of credit purchases from the purchases journal will be posted to
the debit side of the Purchases account in the ledger.
  In the purchases journal entries of individual from whom goods are
bought on credit are recorded on the credit side as they increase the
value of accounts payables.
 Buying goods on credit also increases the value of purchases.
 Accounts payables are credited both in the ledger and the purchases
Journal as they are giving, whilst Purchases account will be receiving
hence it is debited.

Example 1

Record the following transaction in the Purchases journal of R.Shuro for the
month of April 2017.
17 April 2017 R.Shuro bought goods on credit from H.Nhamburo for $700
invoice number M71.

Purchases Journal of R.Shuro

Date Details Purchases Folio Amount
2017 Invoice Debit Credit
No $ $
April 17 H.Nhamburo M71 PL 13 700
April 30 Transfer to debit Purchases account 700

 The PL13 in the folio column indicates that the corresponding entry for
that transaction can be found in the purchases ledger on page 13.

Note

 After recording transactions in the Purchases journal the transactions

are then posted to the Purchases ledger.
 Only credit Purchases of goods in trade are recorded in the Purchases
journal.

Example 2

Draw up the purchases journal of Nyanzira limited from the following

transactions for the month of May 2014.
May 1. Purchased goods $500 on credit from Takaz ltd invoice number
JP900.
May 3. Purchased goods $630 on credit from Sandy invoice number
PO444.
May 5. Purchased goods $450 on credit from Takaruza invoice number
 HG65.
May 6. Purchased goods on credit $560 from Refy invoice number
PQ32.
May 11. Purchased goods on credit $375 from Moyo invoice number
2102.
May 12. Purchased goods on credit $500 from Nhlanhla invoice number
KL56.

Answer

Purchases Journal of Nyanzira limited

Date Details Purchases Folio Amount
Invoice Debit Credit
No $ $
May 1 Takaz ltd JP900 PL16 500
May 3 Sandy PO444 PL24 630
May 5 Takaruza HG65 PL18 450
May 6 Refy PQ32 PL10 560
May 11 Moo 2120 PL30 375
May 12 Nhlanhla KL56 PL44 500
May 31 Transfer to Debit Purchases GL 3 015
Account

Example 3

April 2012 Mayaya Bar bought the following items for its stock. Enter them
in the purchases journal.
April 2. Purchased 35 crates soft drinks on credit from Sibanda Beverages at
$10.00 a crate invoice number BV332.
April 7. Purchased 40 crates of assorted lagers on credit from Mayo
Beverages at $18.00 a crate invoice number BV333.
April 8. Purchased 25 packets biltong on credit from the Shinga Abattoir at
$1.50 a packet invoice number HMS45.
April 15. Purchased 10 boxes of three ships whiskey on credit from Rukarwa
Wholesalers at $37.00 a box invoice number SP66.

Calculations

April 2. Total cost for soft drinks 35×$10= $350.00

April 7. Total cost of assorted lagers 40×$18= $720.00

April 8. Total cost of biltong packets 25×$1.50=$37.50

April 15. Total cost of three ships whiskey 10×$37.00= $370.00

Answer

Purchases Journal of Mayaya

Date Details Purchases Folio Amount

Invoice
2012 Debit $ Credit $
Number

April 2 Sibanda Beverages BV332 PL34 350.00

April 7 Mayo Beverages BV333 PL34 720.00

 April 8 Shinga Abattoir HMS45 PL10 37.50

April 15 Rukarwa Wholesalers SP66 PL29 370.00

April 30 Transfer to Debit 1 477.50

Purchases Account

Example 4

The following transactions of H.N Mukanya occurred in the month of August

2012.

Aug 1. Started business with $1 500 cash.

Aug 2. Bought goods and paid cash $350.

Aug 4. Sold goods for cash $200.

Aug 5. Bought goods on credit $150 from Sibanda.

Aug 7. Bought goods by cheque $100.

Aug 10. Bought Motor Van $200 on credit from Dube Motors.

Aug 11. Received cheque for goods sold $100.

Aug 12. Bought goods on credit from B.Ncube $300.

Highlight using a YES or NO whether the transactions above are

entered in the Purchases day book.

Answer
Transaction Date Answer

Aug 1 No

Aug 2 No

Aug 4 No

Aug 5 Yes

Aug 7 No

Aug 10 No

Aug 11 No

Aug 12 Yes