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Ledger Posting from Purchases Book

Purchases book records only credit purchases of goods. Cash purchases are recorded in the cash book. It is, therefore, necessary that purchases account showing the position of total purchases both cash and credit should be prepared. Posting to purchases account will be made through purchases book. It contains the names of those persons and parties from whom goods have been purchased on credit, so the posting will also be made in these personal accounts. The procedure of posting is explained with the help of following illustration.

Illustration 3. Prepare a purchases book from the following details and also prepare concerned ledger accounts:

2006

Dec. 1              Purchased from Laxmi Publications, New Delhi:

100 Golden  Accountancy for Class XII@ $ 80 each

50 Golden Commerce for Class XII @ $ 40 each

100 Golden Economics for Class XII @ $ 50 each

Trade Discount allowed @ 20%

Dec. 15            Purchased from Laxmi Kitab Ghar; Sonepat :

100 English Guides for Class X@ $ 25 each

200 Hindi Guides for Class X@ $ 20 each

Cash purchases of books from Ankita & Sisters $ 300.

Solution.                                                                                Purchases Book/Purchases Journal

Purchases Account

                                                                 Dr.                                                                                                                                           Cr.

Explanation. The total of the purchases book is posted to the purchases account. The total of the purchases book represents the total of all credit purchases of goods. We need not show every credit purchases individually in the purchases account. The total will be posted at the debit side as ‘To Total Amount as per Purchases Book’. Cash purchases are also posted at the debit side of purchases account. The balance of this account will be transferred to the debit side of Trading account.

Laxmi Publications Account 

Dr.                                                                                                                                           Cr.

Explanation. Laxmi Publications Account appears in the purchases book. As the purchases book has a debit balance, so the posting will be made at the credit side of parties accounts appearing in the purchases book. The name of the supplier of goods on credit is recorded in the purchases book, so all the accounts appearing therein are suppliers. Sellers of goods on credit or suppliers are always credited for supplying goods, so posting is made at the credit side of Laxmi Publications Account as ‘By Purchases Account’. The closing balance of the account will be carried forward to next period.