SUBSIDIARY BOOKS

As all the transactions are recorded in Journal (without any sequence)

It is Convenient to maintain some “Subsidiary ( Supporting/Ancillary/Memorandum) books to help the

“Journal” for some special/frequent transactions

It is part of recording (books of Original/Prime entry), followed by Classification

Introduction

Division of Work Time Saving

Expertise, Efficiency

Easy accessibility of Information

Easy error detection

Advantages

Cash Book Sale Book

Purchase Book Purchase Return Book

Sales Return Book Bill Payable Book

Bill Receivable book

( Note : All other entries done in “Journal Proper”)

Subsidiary Books

A Subsidiary book- Records Cash/Cash Discount/Bank Transactions

Also a Principal books(Serves the purpose of Ledger Account)

Cash Book is prepared as a Cash A/c(It is both a Subsidiary & Principal book)

CASH BOOK

Main Cash Book Petty Cash Book

Single Column Triple Column Cash BookCash Book

Double column Cash book

Types

Shows the Receipts & Payments of only Cash (Hard Cash)

Prepared on Cash basis ( Receipts- Dr. Side, Payments- Cr. Side) as a Ordinary Ledger A/C.

Starts with Cash opening Balance (Dr. Side) & Ends with Closing Balance (Cr. Side)

Always have a Debit Balance

Single Column/ Simple Cash Book

It Records Cash & Cash discount Transactions

Discount (Dr. Side) – Discount allowed Discount (Cr. Side) – Discount Received

Discount columns are not balanced , only totaled

(Note : Cash Discount : Discount for early recovery/payment of Cash)

(Trade Discount- a quantity discount for sale/purchase of bulk quantity)

(Never Recorded separately anywhere )

Double Column Cash Book

Date

Particulars

J.F

Cash

Discount(allowed)

Dt

Particulars

J.F

Cash

Discnt ( Recd)

Total Total

Format

Columns for Cash, Discount & Bank

Entries involving Cash & Bank (called as Contra Entries)

“C” is written in L.F. Column

If cheque deposited on different dateIst Entry : as cash receipt

IInd Entry : as Cash deposit

Three column Cash Book

2016 Jan.1 Mr. Malhotra commences business with Cash 20,000“3 He paid into Current A/c 19,000“4 He received cheque from Rahul & Co. on account 600“7 He pays in bank Rahul & Co’s cheque 600“10 He pays Shyam & Co. by cheque and is allowed discount ` 20 330“12 Kapoor & Co pays into his Bank A/c 475“15 He receives cheque from Rahul and allows him discount ` 35 450 “20 He receives cash ` 75 and chequè 100 for cash sale“25 He pays into Bank, including cheques received on 15th and 20th

1,000

“27 He pays by cheque for cash purchase 275 “30 He pays sundry expenses in cash 50

illustration

Small Cash expenses are recorded (often incurred in the business, like conveyance, courier,etc.)

Imprest System : Every month the closing balance of cash is calculated, & at the beginning of next month, Petty cashier is received net amount(Monthly amount – Costing cash)

Prepared in two ways : Analytical Cash bookSimple Cash book.

Petty Cash Book

Format

Started with the Cash Received periodically by the Main Cashier

Petty expenses are written (both in Total column & specific column)

We get the total petty expenses incurred of the period & the total of head wise expense.

Petty Cash Book

Division of work Saving of time

Less Burden Control over small payments

Check on the junior Cashier

Importance

Shri Ramanathan maintains a Columnar Petty Cash Book on the Imprest System. The imprest amount is ` 500. From the following information, show how his Petty Cash Book for the week ended 12th September, 2015:

Illustration

7/9/2015

8/9/20159/9/201510/9/201511/9/201512/9/201512/9/2015

Balance in handReceived Cash reimbursement to make up the imprestStationery Miscellaneous ExpensesRepairs TravellingStationeryMiscellaneous Expenses Repairs

134.90 365.1049.8020.90156.7068.5071.406.3048.30

Recording the purchase of goods on credit only

No Cash purchases No Purchase of assets (Cash Book) ( Journal Proper)

prepared as an invoice (the name of supplier, description of goods purchased)- Not an A/c

Trade discount received (on Bulk Purchases)Deducted from Gross Purchases

Purchase Book

Vat Paid is added to the Net Purchases (After discount)

Separate Column for Vat paid on purchases(Vat Receivable)- Cenvat Credit receivable

(Shown as Assets)

Separate column for incidental expenses on purchases like Freight

Total of respective columns-transferred to their Ledger Accounts (Total of purchases to Purchases Account)

Purchase Book

There can be eight columns:a. Dateb. Particularsc. Ledger Foliod. Invoice No.e. Detailsf. Amount (Net Purchases)g. VAT Paidh. Expenses

Format

Present the Journal Book:Illustration

April 4

April 15

April 28

Purchased from Ajay Enterprises, Delhi100 Doz. Rexona Hawai Chappal @ ` 120 per Doz. 200 Doz. Palki Leather Chappal@ ` 300 per Doz. Less : trade discount @ 10%Freight charged ` 150. Purchased from Balaji Traders, Delhi50 Doz. Max Shoes @ ` 400 per Doz. 100 pair Sports Shoes. @ ` 140 per paid. Less : trade discount @ 10%. Freight charged ` 200. Purchased from Tripti Industries, Bahadurgarh40 pair leather shoes@ ` 400 per pair100 Doz. Rosy Hawai Chappal@ ` 180 per Doz. Less : trade discount @ 10%. Freight charged ` 100. Purchases are subject to Sales Tax @ 10%.

Recording the Sale of goods on credit only

No Cash Sales No Sale of assets(Cash Book) (Journal Proper)

prepared as an invoice (the name of supplier, description of goods Sold)- Not an A/c

Trade discount allowed (on Bulk Sales)Deducted from Gross Sales

Sales Book

Vat Received (from Customers) is added to the Net Sales (After discount)

Separate Column for Vat received on Sales(Vat Payable)- Shown as Liability(paid to Govt. after claim Cenvat)

Total of respective columns-transferred to their Ledger Accounts (Total of Sales to Sales Account)

Sales Book

Prepare the Sales Book:February 2, 2016 : Sold to South Indian Toys 500 toys @ ` 60 each; Less: Trade Discount @ 5%; Sales tax to be charged @ 10%. February 10, 2016 : Sold to Ria Sisters 100 kg. of wheat @ ` 40 per kg.; Less: 5% Trade Discount; Sales tax charged @ 5% . February 15, 2016 : Sold to Raj Bros. 20 bags of White Cement Powder; @ ` 2,000 per bag; Less: 2% Trade Discount; Sales tax @ 8%. February 27, 2016: Sold to Sen & Co. 10 chests of tea @ ` 500 per chest less 10% Trade Discount; Sales tax is charged @ 5%.

Illustration

Records the details of goods returned (purchased on credit) to the suppliers(Creditors)

“ Returns Outward book”

Prepared like a Purchase bookProportionate discount on the goods returned is also

to be adjusted.

On return, a debit note will be sent to the supplier (along with the goods)

Purchase Return Book

Records the details of goods returned (purchased on credit) by the Customers(Debtors).

“ Returns Inward book”

Prepared like a Sale bookProportionate discount on the goods returned is also

to be adjusted.

On return, a Credit note will be sent to the Customer

Sales Return Book

If the firm have a number of Bill receivables (signed by their Debtors) due to be collected.

The book contains: Name of the acceptor, date of receipt of the bill, term of the bill, due date, Amount, etc.

The total of the amount column of the bills receivable book is debited to bills receivable account

Bill Receivable Book

If the firm have a number of Bill Payables accepted due to be Paid (to Creditors).

The book contains: Name of the Payee, date of acceptance, term of the bill, due date, Amount, etc.

The total of the amount column of the bills Payable book is debited to bills receivable account

Bill Payable Book

For Entries other for which there is no special book.

Opening Entries Closing Entries

Rectification Entries Adjusting Entries

Transfer Entries Others

Journal Proper

Other than these 7 subsidiary books, there may be any other subsidiary

book like Sales on Approval/Return basis book.

(if their transaction are frequent & Often)

Note

Q.1. The primary record of a credit purchase of a fixed asset is made in —

MCQs

Cash book

Sales book

Purchases book

Journal proper

D

Q.2. What is the order in which the accounting transactions and events are recorded in the books?

MCQs

Journal, Subsidiary books, Ledger, Balance sheet, Profit and loss account

Ledger, Journal, Ledger, Balance sheet, Profit and loss account

Journal, Ledger, Profit and loss account, Balance sheet

Profit and loss account, Ledger, Balance sheet, Journal

C

Q.3. Which of the following is a credit transaction?

MCQs

Sold goods

Sold goods for cash

Sold goods to a customer for cash

Sold goods to a customer

D

Q.4. Sales Book is used to record –

MCQs

All sales of goods

All credit sales

All credit sales of assets other than goods

All credit sales of goods.

D

Q.5. When the goods are returned to a supplier -

MCQs

An invoice is sent to him

A debit note is sent to him

A credit note is sent to him

A receipt is sent to him.

B

Q.6. Which of the following is recorded as Contra Entry –

MCQs

With drew from bank for personal use

Cheque received from X lodged into bank on same day

Cheque received from Y before ,now lodged into bank

A customer directly deposited in our bank account

C

Q.7.  Ram is debtor for Rs. 500 ,received a cheque for Rs. 480 from him in full settlement and deposited into bank on the same day .Its entry in 3-column Cash book is –

MCQs

In Dr. side of cash column and discount column

In Dr. side of cash and Cr. Side of discount column

In Dr. side of Bank column and discount column

In Dr. side of Bank & Cr. Side of discount column

C

Q.8. The periodic total of purchase day book is posted to

MCQs

Debit side of purchase a/c

Debit side of trading a/c

Credit side of creditors a/c

Credit side of sales a/c

A

Q.9. Which of the following a/c has a credit balance?

MCQs

Purchase a/c

Sales a/c

Goodwill a/c

Cash in hand a/c

B

Q.10. Provision for bad debts is journalized in

MCQs

General journal

Debtors a/c

Directly in profit and loss a/c

Any of the above three

A

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