Purchases Journal:
Contents:
When a
businessman places an order for goods that he needs, the
seller of the goods makes out an invoice. The top copy
(first copy) of this invoice is received by the purchaser
and is recorded in the purchases journal.
There may be several of these invoices arriving every day,
possibly as many hundred. They will all be the top copies of
other selling firm's invoices and the purchase journal will
be written on the basis of these invoices.
Purchase
Journal
Date |
Description |
Invoice No. |
L/F |
Details $ |
Amount $ |
5.7.2005 |
ABC Stores
200Kg of tea @ $15/kg
Less trade discount |
7540 |
CL1 |
3000
Nil |
3,000
------------
3000 |
Explanation:
In fact there
will be many invoices each day, filling several pages of the
book by the end of the year. The one invoice shown and
recorded is supposed to represent hundreds of invoices
recorded within a year. The following points should be
noted:
-
The name
of the supplier (ABC stores) is written or typed, next
to the date. It is underlined.
-
The details of
the transaction are recorded in the next line down, giving a
separate line to each item of goods supplied.
-
Each invoice
has a serial number which is written in the column, "invoice
no."
-
In the ledger
folio (L.F.) column, the page number of the ledger where the
account of the supplier has been opened, is written.
-
The details column
shows how net price of goods is determined after deducting trade
discount (if allowed) and adding, packing expenses, cartage etc.
-
The amount column
shows the net price of the goods purchased.
Enter the following
transactions into purchase journal:
-
Jan. 10, 2005,
purchased 400kg. of sugar from S & sons. @ $10 per Kg on credit.
-
Jan. 15, 2005, purchased
200 liters of mustard oil from R & Co. @ $12 per liter.
-
Jan. 23, 2005, purchased
100 kg. of soap from Lever Bros. @ $10 per kg.
Purchase Journal (Book) Folio
(Page 12)
Date |
Description |
Invoice No. |
L/F |
Details
$ |
Amount $ |
10.1.2005 |
S &
sons.
400Kg of sugar @ $10/kg |
-- |
CL-8 |
4000 |
4000 |
15.1.2005 |
R &
Co..
200 liters mustard oil @ $12/liter |
-- |
CL-10 |
2400 |
2400 |
23.1.2005 |
Lever
Bros.
100Kg of soup @ $10/kg |
-- |
CL-14 |
1000 |
1000 |
31.1.2005 |
Purchases
account
Dr. |
|
GL-16 |
|
7400 |
Ledger
S & sons A/C (Folio
8)
|
10.1.2005
Purchases A/C 4,000 |
R & Co. (Folio 10)
|
15.1.2005
Purchases A/C 2,400 |
|
|
Purchase A/C (Folio
16)
10.1.2005
Sundry creditors A/C 7,400 |
|
Lever Bros. A/C
(Folio 14)
|
23.1.2005
Purchases A/C 1,000 |
|
It must be noted that from purchases journal,
posting is made in four different accounts, purchase account, S & sons account,
R& co., and Lever brothers account. The purchase account is debited with the
total amount of the three purchases totaling $7,400 (4,000 + 2,400 + 1,000) at
the end of the month. S & sons account is credited with 4,000, R& co. is
credited with 2,400 and Lever brothers account is credited with 1,000 (becoming
creditors of the business).
|
Purchases Journal |
|
Purchases Account |
1. |
It is a book of original
entry - a special journal. |
1. |
It is a book
of final entry - a ledger account. |
2. |
Each item of credit
purchase of goods is recorded here separately in order of date as soon
as the transactions take place. |
2. |
Total of the
purchase book (journal) is recorded at the end of the month. |
3. |
All the details of goods
purchased are written here. |
3. |
No details
are recorded, only the total amount of purchases during a particular
period is recorded. |
4. |
Cash purchased are not
recorded. |
4. |
Both cash
purchases as well as credit purchases are recorded. |
5. |
It is not required for
the preparation of final accounts at the end of the year. |
5. |
In final
accounts, its balance is shown on the debit side of trading account. |
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