subsidiary books

3 SUBSIDIARY BOOKS

Meaning of Special JournalsMeaning of Special Journals

When no. of transactions are large, it is When no. of transactions are large, it is practically impossible to record all the practically impossible to record all the transactions through one journal.transactions through one journal.

To overcome the shortcomings of the use To overcome the shortcomings of the use of Journal, the Journal is subdivided into of Journal, the Journal is subdivided into special journalsspecial journals

Special Journals refer to the journal meant Special Journals refer to the journal meant for specific transactions of similar nature.for specific transactions of similar nature.

Types of Special JournalsTypes of Special Journals

1.1. Cash Book –Cash and Bank transactionsCash Book –Cash and Bank transactions2.2. Purchase Book – Credit Purchase of GoodsPurchase Book – Credit Purchase of Goods3.3. Sales Book – Credit Sale of GoodsSales Book – Credit Sale of Goods4.4. Sales Return Book – Goods returned by customers Sales Return Book – Goods returned by customers

(sold on credit)(sold on credit)5.5. Purchase Return Book – Goods returned to suppliers Purchase Return Book – Goods returned to suppliers

(purchased on credit)(purchased on credit)6.6. Bills Receivable Book – Bills drawn on customersBills Receivable Book – Bills drawn on customers7.7. Bills Payable Book – Bills accepted in favor of Bills Payable Book – Bills accepted in favor of

supplierssuppliers8.8. Journal Proper – Transactions not covered elsewhereJournal Proper – Transactions not covered elsewhere

PURCHASES BOOKPURCHASES BOOK

Only CREDIT purchases of goods are to be Only CREDIT purchases of goods are to be recorded in this journal. Cash purchases are recorded in this journal. Cash purchases are recorded in cash book.recorded in cash book.

The term ‘goods’ covers only those items that The term ‘goods’ covers only those items that are procured by the business for resaleare procured by the business for resale

Entries in the purchase book are made on the Entries in the purchase book are made on the basis of invoices received from the suppliers basis of invoices received from the suppliers with the amounts net of trade / quantity with the amounts net of trade / quantity discounts.discounts.

Format of Purchases BookFormat of Purchases Book

DateDate PurchasePurchase

Invoice Invoice No.No.

Name of Name of SupplierSupplier

L.F.L.F. DetailsDetails

(Rs.)(Rs.)

AmountAmount

(Rs.)(Rs.)

PURCHASES BOOK

Illustration 1: 1: Record the following transactions for Record the following transactions for the month of July,2006 in the purchases book of M/s the month of July,2006 in the purchases book of M/s Neha ElectronicsNeha Electronics

July 5 Purchased from M/s Nelson ElectronicsJuly 5 Purchased from M/s Nelson Electronics

10 Color T.V. @ Rs.7,000/- per pc.10 Color T.V. @ Rs.7,000/- per pc.

5 flat screen T.V. @ Rs.15,000/- per pc.5 flat screen T.V. @ Rs.15,000/- per pc.

Trade Discount on all items @ 15% Trade Discount on all items @ 15%

July 20 Purchased from M/s Weston ElectronicsJuly 20 Purchased from M/s Weston Electronics

5 Weston stereos @ Rs.5,000 per pc.5 Weston stereos @ Rs.5,000 per pc.

4 Weston color T.V. @ Rs.14,000 per pc.4 Weston color T.V. @ Rs.14,000 per pc.

Trade Discount @ 20%Trade Discount @ 20%

SALES BOOKSALES BOOK

Sales Book is used for the purpose of Sales Book is used for the purpose of recording the sale of goods on credit.recording the sale of goods on credit.It records neither the cash sales of the It records neither the cash sales of the goods nor sale of any asset other than goods nor sale of any asset other than merchandise.merchandise.Entries in the sales book are made on the Entries in the sales book are made on the basis of invoices issued to the customers basis of invoices issued to the customers with the amounts net of trade / quantity with the amounts net of trade / quantity discounts.discounts.

Format of Sales BookFormat of Sales Book

DateDate SalesSales

Invoice Invoice No.No.

Name of Name of CustomerCustomer


(Rs.)(Rs.)

AmountAmount

(Rs.)(Rs.)

SALES BOOK

Illustration 2: Illustration 2: Record the following transactions for the Record the following transactions for the month of July,2006 in the sales book of M/s Nayyar month of July,2006 in the sales book of M/s Nayyar ElectronicsElectronics

July 4 Sold goods to M/s Ramesh ElectronicsJuly 4 Sold goods to M/s Ramesh Electronics 10 Philips Iron @ Rs.300 per pc.10 Philips Iron @ Rs.300 per pc. 15 Philips Mixer @ Rs.1,500 per pc.15 Philips Mixer @ Rs.1,500 per pc.July 10 Sold to M/s Surbhi ElectronicsJuly 10 Sold to M/s Surbhi Electronics 5 color T.V. @ Rs.12,000 per pc.5 color T.V. @ Rs.12,000 per pc. 10 music system @ Rs.7,000 per pc.10 music system @ Rs.7,000 per pc.July 20 Sold to M/s National ElectronicsJuly 20 Sold to M/s National Electronics 5 washing machines @ Rs.6,000 per pc.5 washing machines @ Rs.6,000 per pc. 15 Electric ovens @ Rs.2,000 per pc.15 Electric ovens @ Rs.2,000 per pc.It is the practice followed by M/s Nayyar Electronics It is the practice followed by M/s Nayyar Electronics

to allow 10% trade discount on all sales.to allow 10% trade discount on all sales.

Purchase Return BookPurchase Return Book

Used for the purpose of recording the Used for the purpose of recording the returns of merchandise purchased on returns of merchandise purchased on creditcredit

It records neither the return of goods It records neither the return of goods purchased on cash basis nor the return of purchased on cash basis nor the return of any asset other than merchandise.any asset other than merchandise.

Entries are made on the basis of Debit Entries are made on the basis of Debit Notes issued to the suppliersNotes issued to the suppliers

Format of Purchase Return BookFormat of Purchase Return Book

DateDate Debit Debit Note No.Note No.

Name of Name of SupplierSupplier


(Rs.)(Rs.)

AmountAmount

(Rs.)(Rs.)

PURCHASE RETURN BOOK

Illustration 3: Record the following in Illustration 3: Record the following in Purchase Return Book :Purchase Return Book :

July 15 Returned 2 washing machines July 15 Returned 2 washing machines purchased from M/s Manohar Electronics purchased from M/s Manohar Electronics at the list price of Rs.7,000/- per machine at the list price of Rs.7,000/- per machine less trade discount 20%less trade discount 20%

July 25 Returned 6 tape recorders to M/s July 25 Returned 6 tape recorders to M/s Sonika Electronics purchased at Sonika Electronics purchased at Rs.1,000/- per tape recorderRs.1,000/- per tape recorder

Sales Return BookSales Return Book

Used for the purpose of recording the Used for the purpose of recording the returns of merchandise sold on creditreturns of merchandise sold on credit

It records neither the return of It records neither the return of merchandise sold on cash basis nor the merchandise sold on cash basis nor the return of any asset other than return of any asset other than merchandise.merchandise.

Entries are made on the basis of Credit Entries are made on the basis of Credit Notes issued to the customersNotes issued to the customers

Format of Sales Return BookFormat of Sales Return Book

DateDate Credit Credit Note No.Note No.

Name of Name of CustomerCustomer


(Rs.)(Rs.)

AmountAmount

(Rs.)(Rs.)

SALES RETURN BOOK

Illustration 4: Record the following in Sales Illustration 4: Record the following in Sales Return Book:Return Book:

July 1 Ramesh & Co. returned 500 units July 1 Ramesh & Co. returned 500 units sold @ Rs.50 per unitsold @ Rs.50 per unit

July 25 Naresh & Co. returned 300 units July 25 Naresh & Co. returned 300 units sold @ Rs.55 per unitsold @ Rs.55 per unit

CASH BOOKCASH BOOK

A Cash Book is a special journal which is used A Cash Book is a special journal which is used for recording all cash receipts and cash for recording all cash receipts and cash paymentspaymentsCash Book is both a Journal and Ledger. Cash Book is both a Journal and Ledger. The Cash Book is a book of original entry since, The Cash Book is a book of original entry since, transactions are recorded for the first time from transactions are recorded for the first time from source documentssource documentsThe Cash Book is a ledger as it is designed in The Cash Book is a ledger as it is designed in the form of a Cash Account and records Cash the form of a Cash Account and records Cash Receipts on the debit side and Cash Payments Receipts on the debit side and Cash Payments on the Credit Side.on the Credit Side.

Types of Cash BookTypes of Cash Book

Single – Column Cash BookSingle – Column Cash Book

Double – Column Cash BookDouble – Column Cash Book

Three – Column Cash BookThree – Column Cash Book

Petty Cash BookPetty Cash Book

Single – Column Cash BookSingle – Column Cash Book

This Cash – book has one amount column This Cash – book has one amount column on each side.on each side.

All cash receipts are recorded on the debit All cash receipts are recorded on the debit sideside

All cash payments are recorded on the All cash payments are recorded on the credit sidecredit side

Format of Cash BookFormat of Cash Book

DateDate ParticularsParticulars L.L.F.F.

Amount Amount

(Rs.)(Rs.)DateDate ParticularsParticulars L.F.L.F. AmountAmount

(Rs.)(Rs.)

Dr. Cash Book Cr.

Double – Column Cash BookDouble – Column Cash Book

This Cash – book has two amount This Cash – book has two amount columns (one for cash and another for columns (one for cash and another for discount) on each side.discount) on each side.

All cash receipts and discount allowed are All cash receipts and discount allowed are recorded on the debit siderecorded on the debit side

All cash payments and discount received All cash payments and discount received are recorded on the credit sideare recorded on the credit side

Format of Two-column Cash BookFormat of Two-column Cash Book


DiscoDiscountunt

(Rs.)(Rs.)

AmoAmountunt

(Rs.)(Rs.)


DiscoDiscountunt

(Rs.)(Rs.)

AmoAmountunt

(Rs.)(Rs.)

Dr. Cash Book with Discount Column Cr.

Three – Column Cash BookThree – Column Cash Book

This Cash – book has 3 amount columns (Cash, This Cash – book has 3 amount columns (Cash, Bank and Discount) on each side.Bank and Discount) on each side.

All cash receipts, deposits into bank and All cash receipts, deposits into bank and discount allowed are recorded on the debit sidediscount allowed are recorded on the debit side

All cash payments, withdrawals from bank and All cash payments, withdrawals from bank and discount received are recorded on the credit discount received are recorded on the credit sideside

3-Column cash book serves the purpose of 3-Column cash book serves the purpose of Cash Account and Bank Account.Cash Account and Bank Account.

Format of Three Column Cash BookFormat of Three Column Cash Book

Dr. Three Column Cash Book Cr.Dr. Three Column Cash Book Cr.DaDatete

ParticularsParticulars L.L.F.F.

DiscDiscountount

(Rs.)(Rs.)

CashCash

(Rs.)(Rs.)

BankBank

(Rs.)(Rs.)

DaDatete

ParticularsParticulars L.L.F.F.

DiscDiscountount

(Rs.)(Rs.)

CashCash

(Rs.)(Rs.)

BankBank

(Rs.)(Rs.)

Illustration 5:Prepare a Three – Column Cash Book from the Illustration 5:Prepare a Three – Column Cash Book from the following transactions:following transactions:

20062006Jan.1. Cash Balance Rs.9,000/-Jan.1. Cash Balance Rs.9,000/- Bank Balance Rs.11,000/- (Cr.)Bank Balance Rs.11,000/- (Cr.) 3. Paid rent by cheque Rs.3,000/-3. Paid rent by cheque Rs.3,000/- 5. Cash received on account of cash sales Rs.3,000/-5. Cash received on account of cash sales Rs.3,000/- Cash Discount Rs.300/-Cash Discount Rs.300/- 7. Payment for Cash Purchases Rs.1,000/-7. Payment for Cash Purchases Rs.1,000/- Cash Discount Rs.100/-Cash Discount Rs.100/- 9. Cash Payment for salaries Rs.5,000/-9. Cash Payment for salaries Rs.5,000/- 12. Received cheque from Mr. X in final settlement and deposited the same 12. Received cheque from Mr. X in final settlement and deposited the same in Bank Rs.7,700/-in Bank Rs.7,700/- 15. Received cash from Mr. Y Rs.4,000/-15. Received cash from Mr. Y Rs.4,000/- Discount Allowed Rs.500/-Discount Allowed Rs.500/- 17. Cheque received from Z Rs.2,000/-17. Cheque received from Z Rs.2,000/- 22. Withdrawn from bank for personal use Rs.1,000/-22. Withdrawn from bank for personal use Rs.1,000/- 24. Cheque received from Z deposited in Bank.24. Cheque received from Z deposited in Bank. 27. Cheque from Z dishonored and returned by Bank27. Cheque from Z dishonored and returned by Bank 30. Payment of telephone bill by Cheque (including Rs.500/- for residential 30. Payment of telephone bill by Cheque (including Rs.500/- for residential connection) Rs.2,000/-connection) Rs.2,000/-

PETTY CASH BOOKPETTY CASH BOOK

Petty Cash Book is the book which is used Petty Cash Book is the book which is used for the purpose of recording the payment for the purpose of recording the payment of petty cash expenses.of petty cash expenses.Petty Cashier is the person who is Petty Cashier is the person who is authorized to make payments of petty authorized to make payments of petty cash expenses and to record them in petty cash expenses and to record them in petty cash book.cash book.The petty cash book may or may not be The petty cash book may or may not be maintained on ‘Imprest System’.maintained on ‘Imprest System’.

Imprest SystemImprest SystemThe chief cashier estimates the total petty cash The chief cashier estimates the total petty cash expenses for a particular fixed period.expenses for a particular fixed period.

The chief cashier advances the estimated amount The chief cashier advances the estimated amount to the petty cashier in the beginning of the period.to the petty cashier in the beginning of the period.

The Petty Cashier submits the petty cash book The Petty Cashier submits the petty cash book along with supporting vouchers to the chief cashier along with supporting vouchers to the chief cashier at the end of the period.at the end of the period.

The Chief Cashier examines the Cash BookThe Chief Cashier examines the Cash Book

The Chief Cashier reimburses the amount spent by The Chief Cashier reimburses the amount spent by the Petty Cashier.the Petty Cashier.

The Petty Cashier again has the same amount of The Petty Cashier again has the same amount of petty cash in the beginning of new period.petty cash in the beginning of new period.

Format of Petty Cash BookFormat of Petty Cash Book

Petty Cash BookPetty Cash Book

DaDatete

ParticParticularsulars

Cash Cash Book Book FolioFolio

TotalTotal

(Rs.)(Rs.)

DateDate PartiParticularcularss

VoVoucucher her

NoNo

PostaPostagege

TelegrTelegramam

Rs.Rs.

ConveConveyance yance

TravelliTravellingng

Rs.Rs.

Staff Staff

WelfWelfareare

Rs.Rs.

CartaCartagege

Rs.Rs.

PrintiPrinting & ng &

StatioStationerynery

Rs.Rs.

MiscMiscellanellaneouseous

Rs.Rs.

TotalTotal

Rs.Rs.

ReceiptsReceipts PaymentsPayments

Illustration 6: From the following particulars, prepare Petty Cash Book Illustration 6: From the following particulars, prepare Petty Cash Book on imprest system of Shri Lakshman & Co. for the month of Jan., 2006on imprest system of Shri Lakshman & Co. for the month of Jan., 2006

DateDate ParticularsParticulars Rs.Rs.Jan. 1Jan. 1

22

33

44

55

66

77

88

99

1010

1111

1212

1313

1414

1515

1616

Opening Balance on Imprest SystemOpening Balance on Imprest System

Paid for stampsPaid for stamps

Paid cleaner chargesPaid cleaner charges

Paid for farePaid for fare

Paid for office tea etc.Paid for office tea etc.

Paid for repairs of cyclePaid for repairs of cycle

Paid for advertisementPaid for advertisement

Drew imprest from head cashierDrew imprest from head cashier

JOURNAL PROPERJOURNAL PROPER

Journal Proper is a residuary book in Journal Proper is a residuary book in which those transactions are recorded which those transactions are recorded which cannot be recorded in any other which cannot be recorded in any other subsidiary book. subsidiary book.

For example: Opening Entries; Closing For example: Opening Entries; Closing Entries; Transfer Entries; Adjusting Entries; Transfer Entries; Adjusting Entries; Rectifying Entries and Entries; Rectifying Entries and Miscellaneous Entries.Miscellaneous Entries.

Illustration 7:Illustration 7:

Purchased on credit from Bansal & Co. 2 Purchased on credit from Bansal & Co. 2 printers @ Rs.4,500/- printers @ Rs.4,500/- Returned one printer, being defective, to Returned one printer, being defective, to Bansal & Co. @ Rs.4,500/-Bansal & Co. @ Rs.4,500/-Sold on credit two old printers to Murli @ Sold on credit two old printers to Murli @ Rs.750/-Rs.750/-Rent due to landlord Rs.2,000/-Rent due to landlord Rs.2,000/-Salaries due to employee Shyam Salaries due to employee Shyam Rs.1,000/-Rs.1,000/-

subsidiary books

Documents