CHAPTER 4

BOOKS OF PRIME ENTRY

NORLAILY ASNAWI BT SULAIMAN

Learning Objectives
After completing this chapter, you should be able to:

• Explain various types of source documents

• Demonstrate the use of seven types of journals
• Understand the use of various ledgers
• Record transactions from source documents to
journals and posting to the ledger
INTRODUCTION
The accounting process starts from the source documents, which
will later be recorded in the books of prime entry (specialised
journal) and posted to various ledgers.

Source
Documents

Prepare Financial Journal Entries

Statements

Prepare Trial Posting to

Balance Ledgers
SOURCE DOCUMENTS
1. Purchase Order

2. Delivery Order

3. Cash Bill : Receipt of cash payment

4. Invoice : Credit transaction (Sales or Purchase)

5. Receipts : (Payment received by cash/cheque/online)

6. Pay in Slip / Cash Deposit Machine : Money deposited into bank account

7. Cheque

8. Debit Note (Sales return) 9. Credit Note (Purchase return)

10. Payment Voucher (Payment made to suppliers)

Types of Journal (7)
1. Purchases journal
2. Purchase Return / Return outwards journal
3. Sales journal
4. Sales Return / Return inwards journal
5. Cash receipts journal
6. Cash payments journal
Cash Book
7. General journal
 1. PURCHASES JOURNAL
• Function : To record goods purchased on credit
• Source of document : invoice from the supplier

• What is a Purchases Invoice ?

• It is a business document received by the buyer from
the seller stating the amount to be paid for the
purchases made.
FORMAT
Example :
Jun 6 Bought goods on credit from Ahmad RM2000,
invoice no 888
8 Bought goods worth RM150 on credit from
Cheng, invoice no. 738
Purchases Journal
Date Details Invoice no. Amount (RM)
Jun 6 Ahmad 888 2000
8 Cheng 738 150
30 Total transferred to 2150
Purchases a/c
 Ledger
Jun 6 Bought goods on credit from Ahmad RM2000,
invoice no 888

Date
Purchase
30/6 Total purchase 2150 
 

Ahmad
6/6 Purchase 2000
 

NOTE : Ledger that need to be prepare – Purchase, Ahmad & Cheng

 2. PURCHASES RETURN / RETURN
OUTWARDS JOURNAL
• Function : To record transactions involving goods
returned to the supplier
• Source of document : credit note sent by the supplier

• What is a Credit Note?

• Issued by a seller to the buyer who returned goods
FORMAT
Example :
Jun 6 Goods worth RM20 returned to Aliem Ent, credit
note no 910
8 Goods worth RM15 returned to Rome Trading,
credit note 033
Purchases Return Journal
Date Details Credit Note Amount (RM)
Jun 6 Aliem Ent 910 20
8 Rome 033 15
Trading
30 Total transferred to 35
Purchases Return a/c
 Ledger
Jun 6 Goods worth RM20 returned to Aliem Ent, credit note
no 910

Purchase Return
 30/6 Total Purchase
 Date Return 35

Aliem Ent.
6/6 Purchase Return 20
 

NOTE : Ledger that need to be prepare – Purchase return, Ali Ent and Rome Trading
 3. SALES JOURNAL
• Function : To record goods sold on credit
• Source of document : invoice sent to the debtor

• What is a Sales Invoice ?

• It is a business document sent by the seller to the
buyer stating the amount to be paid for the sales
made.
FORMAT
Example :
Jun 6 Sold goods on credit to Ahmad RM200,
invoice no 456
8 Sold goods worth RM150 on credit to
Cheong, invoice no. 812
Sales Journal
Date Details Invoice No Amount (RM)
Jun 6 Ahmad 456 200
8 Cheong 812 150
30 Total transferred to Sales 350
a/c
 Ledger
Jun 6 Sold goods on credit to Ahmad RM200,
invoice no. 456

Sales
 30/6 Total Sales 350
  Date

Ahmad
6/6 Sales 200
 

NOTE : Ledger that need to be prepare – Sales, Ahmad & Cheng

4. SALES RETURN / RETURN INWARDS JOURNAL

• Function : To record transactions involving goods returned by

customer
• Source of document : debit note issued to the customer

• What is a Debit Note?

• Issued by a buyer to the seller who returned goods
• In reply, the seller sent a credit note
FORMAT
Example :
Jun 3 Goods worth RM10 returned by Ana Ent, debit
note no 234
9 Goods worth RM15 returned by Sweet Trading,
debit note 011
Sales Return Journal
Date Details Debit Note Amount (RM)
Jun 3 Ana Ent 234 10
9 Sweet 011 15
Trading
30 Transferred to Sales Return acc 25
Ledger
Jun 3 Goods worth RM10 returned to Ana Ent, debit
note no 234

Sales Return
30/6 Total Sales  
Return 25  

Ana Ent.
Sales
3/6 Return 10
 

NOTE : Ledger that need to be prepare – Sales return, Ana Ent & Sweet Trading
5. CASH RECEIPTS JOURNAL
6. CASH PAYMENTS JOURNAL

5. Cash Receipts Journal

• Function : To record all cash received from any
sources
• Source of document : receipts

6. Cash Payments Journal

• Function : To record all cash outflow from the
business for any purposes
• Source of document : payment vouchers,
cheque counterfoils
 Cheque
counterfoils
FORMAT
Cash Receipts journal
Cash Receipts Journal
Date Accounts Folio Cash Bank Discount Account Sales Other
credited Dr Dr Allowed Receivable Cr accounts
Dr Cr Cr

2018                
Jan. 2 Interest income   50         50

Jan. 7 Sales   2,800       2,800  

Jan. 15 Sales   3,200       3,200  
Jan. 23 Sales   1,500       1,500  
Jan. 24 Wet World   1,600   100 1,700    
Jan. 31 Sales   4,900       4,900  
Jan. 31 Super Globe     4,400 200   4,600  
Trading
Jan. 31 Total   18,450 4,400 300 1,700 17,000 50

NOTE : Ledger that need to be prepare – Cash, Bank, Discount Allowed, Acc. Rec. (Wet World), Sales,
Interest income
 • Cash Payment Journal
Cash Payments Journal
Date Accounts Folio Cash Bank Discount Account Purchases Other
debited Cr Cr Received Payable Dr accounts
Cr Dr Dr
2018                
Jan.1 Rent   900         900
expense
Jan. 4 Purchases   1,800       1,800  
Jan. 20 Wet World   1,650   50 1,700    
Jan. 25 Salaries   7,500         7,500
Jan. 29 Bumi     4,000 100 4,100    
Trading
Jan. 30 Purchases   2,700       2,700  
Jan. 31 Total   18,550 4,000 150 5,800 4,500 8,400

NOTE : Ledger that need to be prepare – Cash, bank, discount received, Account Payable (Wet World &
Bumi Trading),Purchase, Rent Expense, Salaries
 7. GENERAL JOURNAL
• Function : to record the following that do not belong in any
of the special journals
Sales / purchases of non current assets on credit
Correction of errors
Opening entries (balance b/d)
Transfers from the old account books
Withdrawal of inventory by owner
Adjustments (e.g. depreciation)

*we must include NARRATIVES for each transactions in

general journal.
FORMAT
Example :
Apr 1 Hussin took a watch (inventory) worth RM2,000
as a present for his wife
2 Purchased office furniture RM6,000 on credit
from Alam Seni
General Journal
Date Details Debit (RM) Credit (RM)
Apr Drawings 2,000
1 Purchases 2,000
(Owner withdraw goods for personal use)
2 Office furniture 6,000
Alam Seni (creditor) 6,000
(Purchased furniture on credit from Alam
Seni) Narrative
 Ledger
Apr 1 Hussin took a watch (inventory) worth RM2,000
as a present for his wife

Drawing
1/4 Purchase 2000  
 

Purchase
1/4 Drawing 2000
 

NOTE : Ledger that need to be prepare – Drawing, Purchase, Office furniture & Alam Seni
SUMMARY
Journals Functions Examples
1.General Journal - sales / purchase of non current assets on 1. Purchase furniture on credit
credit 2. Owner brought in vehicles
- Correction of errors into the business
- Opening entries (bal. b/d) 3. Owner took goods for
- Transfers balance from old account book personal use
- Withdrawal of goods/inventory
- Adjustments (eg : depreciation)
2. Purchase - To record goods purchased on credit 1. Purchase goods on credit
Journal
3. Purchase - To record goods returned to the supplier/ 1. Return goods to the creditor
Return Journal creditor
4. Sales journal - To record goods sold on credit 1. Sold goods on credit
5. Sales Return - To record goods returned by the 1. Return goods by the debtor
journal customer/debtor
6. Cash Receipts - To record all cash received from any sources 1. Cash sales
Journal 2. Rent/Commission received
3. Owner brought in
cash/cheque
7. Cash Payments - To record all cash outflow from the 1. Cash purchase
Journal business 2. Paid rental/salary/bills
 EXAMPLE
Wedding Boutique is a wedding dress boutique and is owned by Dee. Below are the
transactions of Wedding Boutique for the month of March 2021.

Identify the book of prime entry to record the following transactions:

Date Transactions Book of Prime

Entry
May Started business with cash in bank account which
2 amounted to RM40,000.
6 Purchased computer RM1,500 by cheque for office use
11 Sold goods on credit to Ramona RM800
15 The business brought in a personal motor vehicle for use in
the business amounting to RM14,500.
16 Paid rental expenses amounting to RM1,400 by cash.
20 Suzana took RM300 from the bank and RM200 goods for
personal use.
23 Sales returned by Ramona which amounted to RM100
27 Banked in cash RM3,000
EXAMPLE (ANSWER)
Dress Boutique is a wedding dress boutique and is owned by Dee. Below are the
transactions of Dress Boutique for the month of May 2020.

Identify the book of prime entry to record the following transactions:

Date Transactions Book of Prime

Entry
May Started business with cash in bank account which CRJ
2 amounted to RM40,000.
6 Purchased computer RM1,500 by cheque for office use CPJ
11 Sold goods on credit to Ramona RM800 SJ
15 The business brought in a personal motor vehicle for use in GJ
the business amounting to RM14,500.
16 Paid rental expenses amounting to RM1,400 by cash. CPJ
20 Suzana took RM300 from the bank and RM200 goods for CPJ
personal use. GJ
23 Sales returned by Ramona which amounted to RM100 SRJ
27 Banked in cash RM3,000 CRJ
CPJ
 CASH belong to Money in the bank
business belong to business

Money in the bank

Cash belong to owner belong to business
QUESTION 1
Transactions Books of Prime
Entry
i. Sold goods on credit to customer
ii. Purchase vehicle on credit from creditor
iii. Received cheque from the customer
iv. Purchase goods on credit from supplier
v. Returned goods to the supplier
vi. Paid utility bills by cash
vii. Owner withdraw the money from the business
viii. Owner withdraw goods
ix. Purchase machinery by cheque
x. Received cheque for commission income
xi. Paid salary by cheque
xii. Paid by cash to the supplier