Books of Original Entry

• Sales day book – Source document sales

invoice
• Purchase day book – source document
purchase invoice
• Returns inward book – source document
credit note
• Returns outward book – source document
debit note
 Sales invoice
• In many businesses most sales will be made
on credit
• When goods are sold on credit the seller will
send a document known as a sales invoice to
the customer
• Sales invoice is the original document which
provides the financial information which will
be recorded in the sales day book
 Delivery Note
• A note signed by a purchaser when goods are
delivered as proof that the goods have been
received.
• Delivery note is sent with the goods so that the
customer can check immediately that all the
items listed are being received
• Delivery note is taken back to the accounts
department by the carrier and an invoice is made
 Trade discount
• A reduction, usually quoted as a percentage of
the selling price, which is given by a supplier to
customers in the same trade
• To avoid having two separate price lists all goods
are shown at the same price but a reduction
called trade discount is given to trade customers
• It is simply a convenient way of calculating a
price and is shown only as a reduction on an
invoice
 Sales Day Book
• A list of credit sales
• Sales invoice is Source Document
• Sales day book is used to post debit entries in
the personal accounts in the sales ledger and
the credit entry in the sales account in the
general ledger
• The sales day book is not part of the double-
entry
 Sales Day Book
• Sales day books are also known as sales
journal
• Cash sales are never entered in the sales day
book when goods are paid for immediately by
cash, the original entry is made in the cash
book
 Features of a sales day book
• Date
• Name of customer
• Invoice number
• Folio
• Final amount of invoice
 Sales Day Book
• Entries are made for a certain period, usually a
week or a month
• Then at end of period each customers account is
debited and the sales account is credited from
the sales day book
• This procedure is more efficient and considerably
reduces the number of entries in the sales
account
• Posting to the ledger is a phrase used to describe
the process of making entries in the ledger
accounts
 CLASS EXERCISE
• James Pelaelo is the proprietor of a small
business. His sales on credit for the month of
November 2010 were as follows:
• 1 Nov Grove and Sons invoice no 7876 P138.60
• 9 Nov M Dean invoice no 7877 P120.20
• 18 Nov G Parkinson invoice no 7878 P176.80
• 25 Nov J Spencer invoice no7879 P237.10
• 30 Nov T Gill invoice no 7880 P142.20
 Required
• You are required to:
• Draw up a sales invoice for the above sales
• Enter up the sales day book for the month of
November
• Post to the personal accounts in the sales
ledger and transfer the total to the sales
account in the general ledger
 Sales Day Book/ Journal
Items Invoice Folio Amount
No
2010 Nov
1 Grove & Sons 7876 SL -15 138.60
9 M Dean 7877 120.20
18 G Parkinson 7878 SL-20 176.80
25 J Spencer 7879 237.10
30 T Gill 7880 142.20

Transferred to Sales
account
 Personal Ledger Accounts
Dr Grove & Sons Cr
2010 Nov Folio Amount
1 Sales SB10 138.60

Dr M Dean Cr
2010 Nov
9 Sales sb 11 120.20
Dr G Parkinson Cr
2010 Nov
18 Sales 176.80

Dr Sales Ledger Cr
2010
Nov 30 credit 814.90
Sales
 Purchase Day Book
• Purchase invoice- source document
• When a business buys goods on credit an
invoice will be made by the supplier showing
full detail of the goods. Prices and discounts.
• This is known as the purchase invoice
• It is the original document which provides the
information which will subsequently be
recorded in the ledger
 purchase
• When invoices are received from the supplier
they should always be checked to ensure the
they are genuine and accurate. That is;
• Check that the goods were ordered
• Check that all goods have been received in
good condition and details correspond with
order
• Check prices charged on invoice are correct
• Check all calculations are correct
 Purchase day book
• Only when the checking procedures have
been carried out should the purchase invoice
be entered in the purchase day book.
• This book contains a list of credit purchases
for resale
• Cash purchases are never entered in the
purchase day book
 Features of PDB
• A modern purchases day book is simply a list in
date order, of all purchases on credit showing;
• Date
• Name of supplier
• Invoice number
• Final amount of invoice
• At the end of the period, the suppliers account is
credited and the purchases account is debited
from this original source
 CLASS EXERCISE
• Bokamoso Traders made the following purchases
on credit during the month of May 2010;
• 2 May 2010 F Craig purchase invoice No 79801
P380.50
• 6 May 2010 B Johnson invoice No J/1025 P252.65
• 12 May 2010 V Porter and Sons invoice No
P/9041 P465.30
• 18 May 2010 Grice Bros inv No 93372 P184.90
• 24 May W Nelson inv No 5176 P519.40
 Required
• Enter each invoice in the purchase day book
for the month of May 2010.
• Post to the suppliers personal accounts and
transfer the total to the purchases account
 Returns Day Books
• Sometimes customers will return goods if they
are not completely satisfied. This might be for
any of the following reasons;
• Goods were damaged
• Goods were faulty
• Goods were the wrong size
• Goods were wrong colour
• Goods were the wrong type
• In such cases reduce the amount owed.
 Credit Note
• Almost every business transaction begins with
a source document
• A credit note is the source document for
goods which have been returned
• Credit note is made out by the seller showing
full details of goods returned, prices and
discounts.
• The document is called credit note because
the customers account will be credited
 Returns Inwards Day Book
• Returns inwards day book is simply a list in
date order, of credit notes showing;
• Date
• Name of customer
• Credit note number
• Final amount of allowance
 RIDB
• Entries are made for a certain period
• The rule is to credit each customers account
and debit returns inwards account at the end
of the period (week/month)
• This would reduce amount owing by customer
 Class Exercise
• Pelaelo is a trader. During the month of
November the following goods were returned
by his customers for various reasons;
• 10 Nov Grove and Sons credit note No CN/1
for P15.60
• 15 Nov M Dean credit note No CN/2 for
P22.70
• 28 Nov G Parkinson CN/3 for P26.20
• Write up the returns book and post to ledger
 Returns Outwards Book
• Source document
• Debit Notes
• A debit note is another important document which relates
to goods which have been returned.
• If a purchaser returns goods, a debit note is made out
giving details of the goods and the reasons for their return
• It is the original document which provides the financial
information which will subsequently be recorded in the
ledger
• It is called a debit note because the customer wants to
debit the supplier’s account with the value of the goods he
is receiving back
 Returns Outwards Book
• Firms keep copies of debit notes and these are
entered in the returns outwards day book
• A typical returns day book is simply a list. In
date order, of all debit notes showing;
• Date
• Name of supplier
• Debit note number
• Amount of goods returned
 ROB
• Entries are made for a certain period
• Each supplier’s account is debited and the
returns outwards account is credited from this
original source
• At the end of the period they are entered one
by one to the debit side of each suppliers
account in the purchase ledger, thus reducing
the amount owed
 Class Exercise
• Bokamoso trader made the following returns;
• 8 May F Craig DN/19 for P36.70
• 15 May V Porter DN/20 for P25.60
• 29 May W Nelson DN/21 for P46.20
• Required;
• Write-up the returns out book and
• Post transactions to respective ledger
accounts