Subsidiary Books Noncash Transaction Samir K Mahajan SUBSIDIARY

Subsidiary Books - Non-cash Transaction Samir K Mahajan

SUBSIDIARY BOOKS Kinds of Subsidiary Books/special journal/books of primary records/special journal Generally, transactions are of two types: Cash and Credit. On that basis, we have q Subsidiary Books - Non-cash Transaction q Subsidiary Books - Cash Transaction Samir K Mahajan

SUBSIDIARY BOOKS - NON-CASH TRANSACTION q Day Books o Purchases Book : Purchases Book records only credit purchases of goods ( goods here means on which the trader s dealing) by the trader. Cash purchases of goods, cash and credit purchases of assets are not entered in this book. o Sales Book: Sales Book is meant for entering only credit sales of goods by the trader. Cash sales, cash and credit sales of assets are not entered in this book. o Purchases Return (Returns outward)Book: Purchases Return (Returns outward)Book records the goods returned by the business entity to suppliers. o Sales Return (Returns inward)Book: Sales Return (Returns inward)Book deals with goods returned (out of previous sales) to the business entity by the customers. q Bill books o Bills Receivable Book : Bills Receivable Book records the receipts of bills (Bills Receivable). o Bills Payable Book: Bills Payable Book records the issue of bills (Bills Payable). Samir K Mahajan

SUBSIDIARY BOOKS - NON-CASH TRANSACTION contd. The reasons for the return of goods are i. not according to the order placed. ii. not up to the samples which were already shown. iii. due to damage condition. iv. due to difference in the prices charged. v. undue delay in the delivery of the goods. Samir K Mahajan

SPECIMEN FORMAT OF PURCHASE BOOK Date Inward Invoice Number Particulars Name of Suppliers (Account to be credited) L. F. Amount Details (Rs) Total (Rs) i. Date Column – Represents the date on which the transaction took place. ii. Particulars Column – This column includes the name of the seller and the particulars of goods purchased. iii. Inward Invoice No. Column – Reveals the serial number of the inward invoice. Inward Invoice are prepared by the seller of goods showing details about goods, its price and other expenses incurred. iv. LF. Column – This column shows the page number of the suppliers account in the ledger accounts. v. Details Column – Reveals the amount of goods purchased and the amount of trade discount. vi. Total Column – This column represents the net price of the goods, i. e, the amount which is payable to the creditors after adjusting discount and expenses if any. Samir K Mahajan

PURCHASE BOOK : Example Record the following transactions on purchase book 2006: March 1 Purchases from Purohit Furnishers, Gandhi Nagar (Invoice no. 516) 20 Chairs @ Rs 1500 each 2 Tables @ Rs 4000 each Less trade discount @ 10% March 7 Bought M/S Roy and Co. , Ahmedabad (Invoice number 700) 20 Stools @Rs. 1250 each 10 collapsible chairs @Rs. 2000 each Delivery and cartage Rs. 150 March 21 Purchased from Patel Enterprise. Surat (Invoice nu. 909) 10 chairs @ 1500 each 15 steel cabinet @ Rs. 1500 each packing and Delivery Charges Rs 250 Less trade discount @ 10% March 25 Purchased from Ojha and sons, Baroda (Invoice no. 1000) 2 laptops @ Rs 30000 for office use March 26 Purchase 10 Mini Chairs @ 500 on cash Samir K Mahajan

PURCHASE BOOK : Example contd. PURCHASE BOOK/PURCHASE JOURNAL Date 2006 March 1 Inward Invoice Number 516 Particulars Name of Suppliers (Account to be credited) Purohit Furnishers, Gandhinagar 20 Chairs @ Rs 1500 each 2 Tables @ Rs 4000 each Less: trade discount @ 10% March 7 700 M/S Roy and Co. , Ahmedabad 20 Stools @Rs. 1250 each 10 collapsible chairs@Rs. 2000 each Add: Delivery and cartage Rs. 150 L. F. Amount Details (Rs) Total (Rs) 30000 8000 3800 34200 25000 20000 45000 150 45150 Samir K Mahajan

PURCHASE BOOK : Example contd. PURCHASE BOOK/PURCHASE JOURNAL March 21 909 Patel Enterprise. Surat 10 chairs @ 1500 each 15 steel cabinet @ Rs. 1500 each 37500 3750 Less: trade discount @ 10% Add: packing and Delivery Charges Purchase A/C 15000 22500 Dr 33750 250 34000 113350 Notes: 1. Purchase of laptop will not be recorded in the purchase book, since laptop are assets 2. Trade discount is allowed on price of goods excluding delivery charges and cartage 3. Delivery charges and cartage is direct expense, chargeable from purchaser, so added to the amount payable 4. Purchase on mini chair is cash purchase and hence is not recorded in purchase book. Samir K Mahajan

SPECIMEN FORMAT OF SALES BOOK Date Outward Invoice Number Particulars Name of Customer (Account to be debited) L. F. Amount Details (Rs) Total (Rs) i. Date Column – Represents the date on which the transaction took place. ii. Particulars Column – This column includes the name of the customer and the particulars of goods sold. iii. Outward Invoice No. Column – Reveals the serial number of the outward invoice. Outward Invoice are sent to the customer of goods showing details about goods sold and dispatched, its price. iv. LF. Column – This column shows the page number of the customer account in the ledger accounts. v. Details Column – Reveals the amount of goods purchased and the amount of trade discount. vi. Total Column – This column represents the net price of the goods, i. e, the amount which is payable to the creditors after adjusting discount and expenses if any. Samir K Mahajan

SPECIMEN FORMAT OF SALES BOOK Enter the following transactions in the sales book of Ojha Enterprise , Ahmedabad 2006 May 4 sold M/S Dewan Brothers , Ahmedabad (Invoice no. 175) 10 dozens pencils @Rs 20 per dozen 14 dozens rubbers @ Rs 60 per dozen May 14 Sold to Sikh Enterprise, Gandhi Nagar (invoice no. 200) 5 dozens of gum bottles @ Rs 5 per bottle 70 dozens rulers @ Rs 15 per dozen Less: 10% trade discount May 17 Sold news papers for Rs 200 (Invoice 215) May 21 Sold to M/S Raaj and Co. , Kalupur (invoice no. 255) 10 reams of paper @ Rs 60 per ream less: Trade discount @10 percent May 25 Sold to Gupta enterprise for cash , Chandkheda (Invoice no. 285) 10 dozens pens @ Rs 120 per dozen for cash May 30 sold furniture to M/S Patel and Sons, on credit for Rs 17000 (invoice no. 300) Samir K Mahajan

Sales BOOK : Example contd. SALES BOOK/SALES JOURNAL Date 2006 May 4 May 14 Outward Invoice Number 175 200 Particulars Name of Suppliers (Account to be debited ) L. F. Amount Details (Rs) M/S Dewan Brothers , Ahmedabad 10 dozens pencils @Rs 20 per dozen 14 dozens rubbers @ Rs 60 per dozen 200 840 Sikh Enterprise, Gandhi Nagar 5 dozens of gum bottles @ Rs 5 per bottle 70 dozens rulers @ Rs 15 per dozen 300 1050 Less: 10% trade discount 1350 135 Total (Rs) 1040 1215 Samir K Mahajan

Sales BOOK : Example contd. Sale BOOK/Sale JOURNAL May 21 255 M/S Raaj and Co. , Kalupur 10 reams of paper @ Rs 60 per ream less: Trade discount @10 percent Sales A/C Cr 600 60 540 2795 Notes: 1. Sales of news paper will not be recorded in sales book as its is cash sales and the firm is dealing in stationaries and not in news paper. 2. Sale of furniture will not be recorded Samir K Mahajan

SPECIMEN FORMAT OF PURCHASE RETURN (RETURN OUTWARD) BOOK Date Debit Notice Number Particulars Name of Suppliers (Account to be Debited ) L. F. Amount Details (Rs) Remark Total (Rs) Note: The entries in the Purchases Returns Book are usually made on the basis of debit note issued to the suppliers or credit note received from the suppliers. We call it a debit note because the party’s (supplier) account is debited with the amount written in this note. Remark highlights the cause of purchase return Samir K Mahajan

PURCHASE Return BOOK : Example contd. Prepare Purchase return book or return outward book from the following transactions March 4 Returned to M/S Roy and Co. , Ahmedabad (Debit Notice no. 225) 2 collapsible chair @ 2000 each March 8 Returned to Patel Enterprise, Surat (Debit Notice no. 245) 4 chairs @ 1500 each Less trade discount @ 1% March 15 Returned to M/S ABC , Baroda (Debit notice no. 315) 1 steel Almirah of Rs 4000 Samir K Mahajan

PURCHASE Return BOOK : Example contd. Purchase Return BOOK/Return Outward Book Date Debit Notice No. Particulars Name of Suppliers (Account to be debited ) L. F. Details (Rs) 2006 March 4 225 M/S Roy and Co. , Ahmedabad 2 collapsible chair @ 2000 each March 8 245 Patel Enterprise, Surat 4 chairs @ 1500 each Less trade discount @ 1% March 15 315 Total (Rs) 4000 60 M/S ABC , Baroda 1 steel Almirah of Rs 4000 Purchase Returns A/C Amount 5940 4000 CR. 13940 Samir K Mahajan

SPECIMEN FORMAT OF SALES RETURN (RETURN INWARD) BOOK Date Credit Notice Number Particulars Name of Customer (Account to be credited) L. F. Amount Details (Rs) Remark Total (Rs) Note: The entries in the sales Returns Book are usually made on the basis of credit note issued to the customers or credit note sent from the customers. We call it a credit note because the party’s (customer’s ) account is credited with the amount written in this note. Remark highlights the cause of sales return Samir K Mahajan

Sales Return (Return Inward) Book or Journal : Example Enter the following transactions with sales return book : 2006 Jan 9: Returned by M/S Gope and Co. (Credit note: No. 2308) 20 bags coffee @ Rs 300 per Bag 10 Chests Tea @ Rs. 400 per chest Jan. 17: Returned by Ankita and Sisters 15 tins Ghee @ Rs 500 per tin less trade discount @10 percent Samir K Mahajan

Sales Return (Return Inward) Book or Journal : Example Sales Return Book/ Journal Samir K Mahajan

TRADE DISCOUNT Trade discount is an allowance or concession granted by the seller to the buyer, if the customer purchases goods above a certain quantity or above a certain amount. The amount of the purchase made, is always arrived at after deducting the trade discount, ie. , only the net amount is considered. For example, if the list price (price prescribed by the manufacturers or wholesalers) of a commodity is Rs. 100, and trade discount granted by manufacturer to the wholesaler is 20% then cost price of the commodity to the wholesaler is Rs. 80. Trade discount is not recorded in the books. They are used for determining the net price. CASH DISCOUNT Sale of goods on credit is a common phenomenon in any business. When goods are sold on credit the customers enjoy a facility of making payment on some date in the future. In order to encourage them to make the payment before the expiry of the credit period a deduction is offered. The deduction so made is known as cash discount. For example, If Ram purchases goods worth Rs. 5, 000 on 30 days credit then, as per the terms of contract, he is authorised to make payment 30 days after the date of purchase. If he is offered a cash discount of 2% on payment within 10 days and if he does so, he is entitled to deduct Rs. 100 from the invoice price and pay Rs. 4, 900. In this case Rs. 100 is cash discount. But if he does not choose to make payment within 10 days then he will not get any cash discount. In this case he will pay Rs. 5, 000 after 30 days. Samir K Mahajan