Learning Special Journals: Purchases, Returns, Sales, and Sales Returns Books, Study Guides, Projects, Research of Business

Download Learning Special Journals: Purchases, Returns, Sales, and Sales Returns Books and more Study Guides, Projects, Research Business in PDF only on Docsity! ACCOUNTANCY130 Notes PURCHASES AND SALES BOOK In the previous chapters you have learnt that journal can be classified into various special journals/books and journal proper. These special journals/books are also known as special purpose books. In this lesson you will learn about various types of special journals/books such as Purchases Book, Purchase Returns Book, Sales Book, and Sale Returns Book. A business can divide its journals into many more books according to requirement, if the number of business transactions of similar nature are quite large and repetitive in nature. After studying this lesson you will be able to : • understand the meaning of Purchases Book and Purchases Returns Book; • prepare Purchases Book and Purchases Returns Book; • understand the meaning of Sales Book and Sales Returns Book and • prepare Sales Book and Sales Returns Book 9.1 MEANING OF PURCHASES BOOK AND PURCHASES RETURNS BOOK If your firm deals in purchasing of goods on credit involving large number of transactions, it will be convenient to maintain Purchases Book as a journal of original entry for recording all transactions of goods purchased on credit by your firm. Transactions related to purchasing good by cash are not recorded in Purchases Book, these are recorded in Cash Book. Similarly, any credit purchases of items which are not related to resale as goods will also not be recorded in the Purchases Book, these are recorded in Journal Proper. When the goods are purchased on credit, an invoice/bill issued by the supplier, is received. Such invoice/bill contains detailed information related to transaction such as details of items purchased, list price, various discounts if any, various applicable charges, net amount payable, terms and conditions, date and serial number of invoice/ bill etc. Thus, necessary information required for recording into Purchases 9 OBJECTIVES MODULE - II Journal and Other Subsidiary Books ACCOUNTANCY Notes 131 Book are available with the invoice/bill. A specimen format of Purchase Book is given as under: Purchase (Journal) Book Date Invoice Voucher Particulars L.F. Detail Total No. No. (Name of Supplier) (`) (`) The explanations of above mentioned columns of the Purchase Book are as follows: Date : In this column, the day, month and year of the transactions are recorded in chronological order. Invoice Number : In this column, Invoice/bill number is entered. Voucher Number : In this column, voucher number is entered Particulars (Name of Supplier) : In this column, the name of supplier-firm, from whom the goods were purchased, is written in bold letters or underlined. Below this, the details of goods purchased are written in serial order. Ledger Folio : In this column, the page number of the ledger book or ledger account number of the supplier party is put up for the purpose of cross-reference. Details : Any trade discount allowed by the supplier is to be deducted from the total of particulars column. the net amount after deducting trade discount (if any) is taken to this column. Amount : The net amount which is payable to the supplier, is mentioned in the appropriate currency as shown in the invoice/bill. Note : After calculating the net amount of purchases, the amount charged by the seller for sales tax/VAT is also added to the net amount payable to the supplier. If there are some packing charges claimed by the seller, they will also be included with the net amount payable. Illustration 1 Prepare a purchases book from the following transactions of Sonu Electric Stores, New Delhi. Purchases and Sales Book MODULE - II Journal and Other Subsidiary Books ACCOUNTANCY134 Notes Dr. Purchases Account Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Jan.31 To Sundries as per Purchases Book 62,607 Purchases Return Book or Return Outwards Book or Purchases Return Journal Sometimes goods purchased from the supplier are returned fully or partially on account of various reasons such as supply of defective goods, spoiled in transit or it is not upto mark as per our order etc. Such goods are returned to the supplier. For this purpose a debit note, containing the required details of returned goods, is also prepared and sent to the supplier for making necessary entries. If the number of purchases returns is very few, it is recorded into the Journal Proper. But if the number of Purchases returns is very high, the recording of such returned goods is done into the Purchase Return Book. A specimen format of Purchase Returns Book is given as under: Purchase Returns Book Date Particulars Debit L.F. Details Total (Name of Supplier) Note No. (`) (`) The explanation of above mentioned columns of the Purchase Returns Book is given as follows: Date : In this column, the day, month and year of the purchase returns transaction is recorded in chronological order. Particulars (Name of Supplier) : In this column, the names of supplier-firms, to whom the goods were returned, are recorded. Debit Note Number : In this column, debit note number is entered. Ledger Folio : In this column, the page number of the ledger book or ledger account number is recorded for the purpose of cross-reference. Details : The net amount after trade discount is recorded in this column. Amount : In this column, net amount of Purchase Returns which is recoverable from the supplier, is mentioned. Purchases and Sales BookMODULE - II Journal and Other Subsidiary Books ACCOUNTANCY Notes 135 Illustration 2 Enter the following transactions in purchases return book : 2012 Mar. 09 Goods Returned to Bala Ji ̀ 1,900. Mar. 11 Goods returned to Kishan being not according to sample worth ̀ 1,400. Mar. 28 Allowance claimed from Mahabir and Bros. on account of mistake in the invoice ` 200. Mar. 31 Returned goods to Madan Lal & Sons, Delhi for ` 1,700 less trade discount @ 10%. Solution Purchases Returns Book Date Particulars Debit L.F. Details Total Note No. (`) (`) 2012 Mar. 09 Bala Ji 1,900 Mar. 11 Kishan 1,400 Mar. 28 Mahabir & Brothers 200 Mar. 31 Madan Lal & Sons, Delhi 1,700 Less : Trade discount @ 10% 170 1,530 Mar. 31 Purchases Returns A/c Cr. 5,030 Posting from Purchase Returns Book /Journal into ledger Posting of necessary details from Purchase Returns Book/Journal is made at the time of goods returns, into the returned ledger account of supplier on the debit side with the amount, date and number of the debit note. Page number of the Purchases Returns Book is also put into the appropriate column of the ledger. At the end of the month, the grand total of the Purchases Returns Book is posted to the credit side of Purchase Returns Account in the ledger writing in the particular column “Sundries as per Purchases Return Book”. LEDGER Dr. Bala Ji Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Mar.09 To Purchase Return A/c. 1,900 Purchases and Sales Book MODULE - II Journal and Other Subsidiary Books ACCOUNTANCY136 Notes Dr. Kishan Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Mar.12 To Purchase Return A/c. 1,400 Dr. Mahabir & Bros. Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Mar.28 To Purchase Return A/c. 200 Dr. Madan Lal & Sons Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Mar.31 To Purchase Return A/c. 1,530 Dr. Purchses Returns Account Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Mar. 31 By Sundries as per Purchases Returns Book 5,030 Which of the following transactions will be entered in the Purchases Book or Purchases Returns Book or none of the said books? i. Furniture purchased from M/S Saurabh Furniture. ii. Goods purchased from M/S Keshav were returned to them as goods were not according to the specifications. iii. Goods of `12, 000 were purchased from M/S Warner Brothers for cash. iv. M/S Puri & Sons supplied goods on credit for ` 1,500. v. Purchased goods from Kwatra on credit for ̀ 2,000. Purchases and Sales Book INTEXT QUESTIONS 9.1 MODULE - II Journal and Other Subsidiary Books ACCOUNTANCY Notes 139 Ledger of M/s. Kamal & Bros. Dr. M/s. Gupta & Sharma Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) To Sales A/c. 63,900 Dr. M/s. John & Sons Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) To Sales A/c. 80,000 Dr. M/s. Mahar & Nahar Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) To Sales A/c. 1,71,000 Dr. Sales Account Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) Sundries as per Sales Book of the month of February. 3,14,900 Sales Returns Book or Returns Inwards Book When goods returned by the customers generally are recorded in a separate book, named as ‘Sales Returns Book’. It is also called as ‘Sales Returns Journal’ or ‘Returns Inward Book’. The rules of recording in sales return Book is same as of Purchase Return Journal. For this purpose a credit note, containing the required details of returned goods, is also prepared and sent to the customer for making necessary entries. The recording of such returned goods is done into the Sales Return Book on the basis of information provided in the Credit Note. A specimen format of Sales Returns Book is given as under: Sales Returns Book Date Credit Particulars L.F. Details Amount Note No. (Name of Customer) (`) (`) Purchases and Sales Book MODULE - II Journal and Other Subsidiary Books ACCOUNTANCY140 Notes The explanations of above mentioned columns of the Sales Returns Book are given as follows: Date : In this column, the day, month and year of the sales returns transaction is recorded in chronological order. Credit Note Number : In this column, credit note number is entered. Particulars (Name of Customer) : In this column, the names of customer-firms, by whom the goods were returned, are written in bold letters or underline it. Just below it write the complete details of the goods returned including their price and quantity. Ledger Folio : In this column, the page number of the ledger book or ledger account number of the customer party is put up for the purpose of cross-references. Details : Only the net amount after the trade discount should be recorded. The prices should be the same at which the goods were sold. Amount : In this column, net amount of sales returns, which is payable to the customer, is mentioned in the appropriate currency as shown in the credit note. Illustration 4 Prepare the sales Return Book in the books of Lal & Co. from the following transactions: 2012 April 06 Goods returned by Pawan & Co. : 2 Table Fans @ ` 600 each Less : Trade Discount 15% April 12 Laxman Oil Mills returned defective goods valued ` 4,250. Solution Sales Return Book or Return Inwards Book Date Credit Particulars L.F. Details Amount Note No. (Name of Customer) (`) (`) 2012 April 06 Pawan & Co. : 2 Table Fans @ ` 600 each 1,200 Less : Trade Discount 15% 180 1,020 April 12 Laxman Oil Mills 4,250 April 30 Sales Return A/c …Dr. 5,270 Purchases and Sales BookMODULE - II Journal and Other Subsidiary Books ACCOUNTANCY Notes 141 Posting from Sales Returns Book into Ledger Accounts Each customer's account who returned the goods is credited with the net amount of the returns. The total of the Sales Returns Book at the end of a specified period is debited into the Sales Return Account in the ledger. Illustration 5 Record the following in the Return Inwards Book. 2012 Jan. 01 M/s. Ghanshyam & Co. returned 500 units Sold @ ` 50 per unit. Jan. 25 M/s. Narain & Co. returned 300 units Sold @ ` 55 pr unit. Solution Sales Return Book Date Credit Particulars L.F. Details Amount Note No. (Name of Customer) (`) (`) 2012 Jan. 01 M/s. Ghanshyam & Co. : 500 Units @ ` 50 per unit 25,000 Jan. 25 M/s. Narain & Co. : 300 Units @ ` 55 per unit 16,500 Jan. 31 Sales Return A/c … Dr. 41,500 Ledger Book Dr. Ghanshyam & Co. Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Jan. 01 By Sales Return A/c. 25,000 Dr. Narain & Co. Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Jan. 25 By Sales Return A/c. 16,500 Dr. Sales Returns Account Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount (`) (`) 2012 2012 Jan. 31 To sundries as per Sales Return Book 41,500 Purchases and Sales Book MODULE - II Journal and Other Subsidiary Books ACCOUNTANCY144 Notes 5. M/S Tyagi Furniture wants you to prepare sales journal for the month ended 31st March 2012, from the following details of sale of goods: Date Details 2012 Mar. 4 Sold on credit to M/S Mona Traders: Vide Invoice No. 330 (a) Two double beds @ ̀ 7,100 each. (b) Five chairs @ ` 260 each. Mar. 9 Sold on credit to M/S Kishan Furniture: Vide Invoice No. 238 5 tables @ ̀ 1,400 each. Mar. 24 Sold on credit to M/S Darshan Furniture: Vide Invoice No. 340 4 sofa sets @ ` 18,000 each. Mar. 30 Sold on credit to M/S Gopal Furniture: Vide Invoice No. 485 6 single beds @ ` 6,000 each. 6. Enter the following transactions in the proper books of M/S Devika Ltd. for the month of July 2012: 2012 July 01 Bought from Kuldeep Traders as per invoice no. 7669 100 note books @ ` 20 each. 50 gel pens @ ` 10 each. 100 packets of color pencils @ ̀ 15 per packet. Trade discount 10% July 12 Bought from Abhimanyu Stationers as per invoice no. 3450 100 files @ ̀ Rs.12 per file 10 rim paper @ ̀ 300 per rim. Trade Discount 5% July 17 Returned to Savita Traders as per debit note no. 281 10 packets of color pencils @ ` 15 per packet. Trade Discount @ 10% July 22 Bought from Manik Stationery as per invoice no. 8760 50 packs of water color @ ` 50 per pack Net. July 31 Returned to M/S Ritu Stationers as per debit note no. 340 3 rim paper @ ` 300 per paper. Trade Discount 5% 7. Prepare Purchases Book from the following transactions and post it into ledger : 2012 May 02 Boutht from Dhria & Co., Noida : 110 quintal rice @ ` 2,000 per quintal 115 quintal sugar @ ` 1,500 per quintal Trade discount 10% Purchases and Sales BookMODULE - II Journal and Other Subsidiary Books ACCOUNTANCY Notes 145 May 09 Purchased from Amit Kumar & Co., Alwar : 30 quintal wheat @ ` 1,800 per quintal. 20 quintal gram @ ̀ 1,700 per quintal. May 15 Bought for cash from Gopal Agencies, Hisar: 220 tins ghee @ ` 500 each tin. May 20 Bought furniture for office use from Bhagwati Furniture, Bhiwani: 70 chairs @ ` 200 each. 20 tables @ ` 1,200 each Trade discount 10% May 25 Bought from Gupta Traders, Ambala : 440 quintal rice @ ` 1,500 per quintal 210 quintal sugar @ ` 1,400 per quintal Trade discount 10%, Sales tax 5% 8. Prepare Purchases Book of Electronics Bhiwani from the following transactions of : 2012 Jan. 03 Bought from Sun Electricals, Ghaziabad : 100 tube lights @ ̀ 40 each. 500 table fans @ ̀ 500 each. Trade discount @ 10% Jan. 11 Purchased goods from Ravi Electric Company, Amroha : 300 bulbs @ ` 10 each. 240 Irons @ `. 200 each Trade Discount @ 15% Jan. 15 Bought furniture from Modern Furniture House, Delhi : 10 chairs @ ` 1,200 each 3 tables @ ` 4,000 each Jan. 20 Bought from Raftar Fans India, Delhi for cash : 50 fans @ ` 1,400 each Jan. 28 Bought from Ram and Laxman Co., Delhi : 250 tube lights @ ` 45 each 9. Suresh Chand is trading as furniture dealer. The following information is available : 2012 Nov. 06 Returned to Alok Kumar 50 chairs @ ` 230 per chair being not of specified quality. Nov. 14 Sent back one dining table to Gulshan Grover, Ludhina for not being polished @ ` 4,300 and 10 chairs @ 250 each. Nov. 21 Returned to Amrit Kaur & Co., Bhatinda, being not according to sample : 30 chairs @ ` 425 each. 25 dressing tables @ ̀ 2,200 each Purchases and Sales Book MODULE - II Journal and Other Subsidiary Books ACCOUNTANCY146 Notes Nov. 27 Returned 12 study tables to Satkshi Furniture, Baurot @ ` 1,500 being not of specified quality. Record the above information in proper subsidiary books. 10. Enter the following transactions in returns inward book of Balwant Singh. 2012 Sept. 07 Subhash and Sons, Kanpur returned goods being not according to sample ` 12,000. Sept. 18 Allowance claimed by Gandhi & Co., Delhi on account of mistake in the invoice ` 1,000. Sept. 21 Goods sold to Hari Ram Gopi Chand, Mumbai and returned by him being defective in colour ̀ 1,800. Sept. 28 Goods returned to us by Kamal & Bros., Kerala worth ̀ 1,500 less 10% trade discount. 11. Prepare Returns Inward and Returns Outward Book from the following transactions: 2012 Jan. 04 Returned to Gopal Furniture, Hari Nagar : 40 chairs @ ` 200 each Less : Trade Discount 10% Jan. 11 Rihan & Bros. returned us : 4 tables @ ` 1,800 each 15 chairs @ ` 1,500 each Jan. 16 Goyal & Co. returned the following : 2 Sofa Sets @ ̀ 13,000 each less 10% trade discount Jan. 21 Returned to Premi Furniture House, Noida 10 tables @ ` 700 each 20 chairs @ ` 1,150 each Less : Trade Discount 10% 12. Enter the following transactions in Subsidiary Books. 2012 Sept. 01 Sold to Republic Furnishings, Noida : 2 bed @ ` 500 each 10 dining tables @ ̀ 3,000 each Sept. 05 Purchase from Kaveri Furnitures, Meerut : 1 Dressing table ̀ 250 (net) Sept. 08 Mohan Furniture invoiced the following : 1 office table @ ` 150 Sept. 10 Returned to Tara Chand & Co. : 7 bed-room suites @ ` 4,300 each 5 dinning tables @ ̀ 5,000 each Purchases and Sales BookMODULE - II Journal and Other Subsidiary Books