BOOKS OF ORIGINAL ENTRY/SUBSIDIARY BOOKS

- Transactions are recorded here before posting to ledger

1. The Purchases Day Book – This is a list of all the business’ creditors. It is used to
record all transactions of goods that were purchased on credit

2. The Sales Day Book – This is a list of all the business’ debtors. It is used to
record all transactions of sale of goods on credit

INVOICES ARE RECORDED IN SALES BOOK AND PURCHASES BOOK

- Invoices sent- sales book
- Invoices received- purchases book

3. The Purchases Returns and Allowances Book - used to record any returns of
goods to creditors (i.e. any goods that are returned by your business to its
suppliers)

4. The Sales Returns and Allowances Book - used to record any returns of goods
from debtors (i.e. any goods that are returned by the business’ customers)

5. The Cash Book -

- a cash transaction is any transaction made by cash or cheques.

- The cash book is used to record all receipts of cash to the business and all
payments of cash from the business.

6. The General Journal – used to record all other transactions not recorded in the
other subsidiary books. Further details of the General Journal are given in the
related notes that follow.

THE PURPOSE OF USING BOOKS OF ORIGINAL ENTRY

1. Books of original entry help split work among clerks.

2. Different transactions go in different books, so the job of recording

transactions can be distributed and fewer end up in the general ledger.
POSTING THE PURCHASES, SALES, PURCHASES RETURNS AND
SALES RETURNS BOOKS TO THE SUBSIDIARY LEDGERS
The subsidiary ledgers are:

√ The Purchases Ledger which contains only the accounts of creditors

√ The Sales Ledger which contains only the accounts of debtors

√ The General Ledger which is reserved for all expenses and revenue accounts
(e.g. sales, purchases, sales returns, purchases returns, wages, electricity,
utilities, interest paid, rent, etc. and the cash a/c and bank a/c)

So divide your ledger page into “Purchases ledger”, “Sales

ledger” and “General ledger”

Purchases ledger:
- “Purchases” always goes on right side
- “Purchases returns” always go on left side
For purchases returns, just add it to the purchase before that that person
made

Sales ledger:
- “Sales” always on left side
- “Sales returns” always on right side
For sales returns, just add it to the sale before that that person made

General Ledger
Purchase A/C AND Purchases returns A/C
- “Sundry creditors” on right side along with total from each
respective subsidiary book

Sales A/C AND Sales returns A/C

- “Sundry Debtors” on left side along with total from each respective
subsidiary book
CASH BOOK
GENERAL JOURNAL
Used for other transactions that are not recorded in the other books of
original entry.

- Opening entries
- Purchase of fixed assets on credit
- Sale of fixed assets on credit
- Depreciation and provision for depreciation
- Bad debts and provision for bad debts
- Dishonured cheques
- Bank loans and interest charges