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SPECIAL JOURNAL

(Subsidiary Books)

Special Journal, also known as Subsidiary Books or Day Books consists of Cash Book, Purchase

Book, Sales Book, Returns Inward and Returns Outward Book. These are subsidiary books having their own unique and specific features. All transactions concerning these books are recorded therein. In general, there is lot of transactions concerning these books so, these books are separately prepared in our financial accounting and special treatment is accorded to them.

Few transactions which do not find a place such as opening, closing, transfer, rectifying and adjusting entries are recorded in General Journal.

PURCHASES BOOK

(Or PURCHASE JOURNAL)

It is one of the most important books, which records credit purchases of goods. As we know, all cash purchases are recorded in the cash book. Credit purchases cannot be reco1ded in the cash book. The business wants to know the information about the credit purchases of goods at a glance. The information can be made available, when purchases of goods on credit are separate1y recorded. Purchases book does not keep record of the purchases of assets even though it is on credit. Purchases of goods on credit only are recorded in the purchases book. Goods, here means the articles in which the firm is dealing. In other words, it is the item, which is purchased for regular sales. For example, furniture will be treated as goods in case of the firm dealing in furniture. For other firms, which are not dealing in furniture, it will be an asset for them. Plant and machinery are generally assets but if there is a firm which has been dealing in plant and machinery, it will be goods for the firm. While recording transactions in the purchases book, we must ascertain that the credit purchases are related to the articles in which the firm is dealing. Purchases book is prepared on the following format:

Explanation of Columns 

(1) Date. The date column records the dates of the purchases of goods on credit.

(2) Invoice. Invoice is the statement prepared by the seller of goods. It contains details about the goods, its price and other expenses incurred. Instead of writing complete details about the goods purchased, only invoice number is mentioned. The requisite information, if any, may be obtained from the invoice.

(3) Particulars. This column bears the name of the supplier from whom goods have been purchased. The details of goods purchased are also written in this column. It contains the name, quantity, number and rate of the goods purchased. Any other specification and specialties of the goods is also written in this column.

(4) Ledger Folder. Ledger folio means the page number of the ledger. We have to post the purchases of goods in the ledger accounts of suppliers. Purchase book contains the page number of supplier’s account in the ledger. It facilitates in the posting and also in checking the records.

(5) Amount (Details). This column is divided in two parts i.e., details and total. The details column is used to write the individual total of the items purchased from a particular supplier. This column is used, when we purchase more than one item from a particular supplier. This will also be used when we purchase only one item and trade discount is allowed to us. The column is used for additions and subtractions.

(6) Amount (Total). The total column shows the net amount payable to the supplier of goods. The purchases book can also be prepared in column form. The column purchases book is prepared as under:

Illustration 1. Record the following transactions in the Purchases Book :

2006

Mar. 1              Purchased from Garg Furnishers, Kirti Nagar (Invoice No. 516)

20 chairs @ $ 150 each

2 tables @ $ 400 each

Less: Trade Discount@ 10%

Mar. 7              Bought of M/s Roy & Co., Kirti Nagar (Invoice No. 700)

2 stools @ $ 125 each

10 Collapsible chairs @ $ 20 each

Delivery and cartage $ 15

Mar. 21            Purchased from Patel, Lajpat Nagar (Invoice No. 909)

10 chairs @ $ 150 each

15 steel cabinets @ $ 150 each

Packing and delivery charges $ 25

Less: Trade Discount @ 10%

Mar. 25            Purchased from Adi & Sons. Kirti Nagar (Invoice No. 1000)

2 Typewriters @ $ 7750 for Office use.

Solution:

Purchases Book/Purchases Journal

Notes:

  1. Purchases of typewriter will not be recorded in the purchases book, because typewriter is an asset for a firm dealing in furniture.
  2. Trade discount is allowed on the purchase price of goods excluding delivery charges and cartage.
  3. Delivery charges and cartage is direct expense, chargeable from purchaser, so added to amount payable.

SALES BOOK

                                                                                                              (Or SALES JOURNAL)

Sales book records credit sale of goods only. It does not record cash sales of goods. Cash sales are recorded in the cash book. All the credit sales are not recorded in it. Credit sales of assets are also not recorded in the sales book. We can summaries that:

  1. Cash sales are not recorded in sales book.
  2. All sales are not recorded in it.
  3. Credit sales of assets are not recorded.
  4. Only credit sales of goods Is recorded. 

Goods means the articles in which the firm has been dealing. Goods are purchased for regular sales. Raw materials used for manufacture of the articles, sold by the firm are also goods. Articles produced, assembled, manufactured or purchased for sales are all goods. The date column of the sales book shows the date of credit sales. Particulars column contains the name of party purchasing goods or the party whom goods have been sold. It also· shows the details of goods as regards its quantity, specifications and also the rate of trade discount allowed. L.F. column shows the page number of debtors account in the ledger. The details column is used for additions and subtractions, if any. The total column bears the net amount payable by individual customers. The format of the sales book is as under: 

Sales Book/Sales Journal

Explanation of Columns: 

(1)   Date. It is the first column of the sales book. It records the date of actual credit sale. 

(2)   Invoice No. Invoice is the statement sent by us to the customer containing details of goods sold and dispatched. Its number is mentioned in the sales book, so that necessary information regarding sales may be obtained whenever required.

(3)   Particulars. It records the names and addresses of persons or parties from whom goods have been purchased. Names, types, size, number, quantities and other specific features of the goods are also recorded.

(4)   Ledger Folio (L.F.). The column records the ledger page number of the persons/parties mentioned the sales book, so that posting in the concerned Purchases A/c can be made.

(5)   Amount (Details). This column records the amount of different items purchased from single party the total is transferred to the total column. This column will also record the amount of sales, even if only item has been sold and trade discount is allowed. This column is used for additions and subtractions.

(6)   Amount (Total). This column records the net total of amount of sale to every party.

 

Illustration 2. Enter the following transactions in the Sales Book of M/s David & Co., NOIDA :

2006

May 4              Sold to M/s Adi Bros., NOIDA (Invoice No. 175)

10 dozens pencils @ Rs. 20 per dozen

14 gross rubbers Rs. 5 per dozen

May 14            Sold to M/s Avi & Co., Kirti Nagar (Invoice No. 200)

5 dozens gum bottles @ $ 5 per bottle

70 dozens rulers @ $ 15 per dozen

Less: 10% Trade Discount 

May 17            Sold old newspapers for $ 200 (Invoice No. 215) 

May 21            Sold to M/s Sumit & Co., Moti Nagar (Invoice No. 255)

I 0 reams of paper @ $ 60 per ream

Less: Trade Discount @ 10% 

May 25            Sold to M/s Gupta & Co., Kirti Nagar for cash (Invoice No. 285)

1 0 dozens pens @ $ 1 2C per dozen for cash 

May 30            Sold to M/s Cheap Stores, New Delhi (Invoice No. 299)

10 dozens pencils @ $1 8 per dozen

Less: Trade Discount @ I 0%

May 31            Sold old furniture to M/s Novelty Co., on credit for $ 1700. (Invoice No. 300)

 

Solution: Sales Book/Sales Journal

Notes:

(i) Sale of newspaper will not be recorded in the sales book, because it is cash sales and the firm has been dealing in stationery not newspaper. Sale of furniture also will not be recorded.

(ii) Cash sales is recorded in cash book, not sales book.

                                                                                                                  PURCHASES RETURN BOOK

                                                                                                          (Or PURCHASES RETURN JOURNAL)

Goods purchased on credit may be returned to the seller in case of certain defect or violation of certain conditions. They may be returned; if they are not according to sample and specification or if goods have been supplied more than what they have been ordered.

Purchases return book is made in the same fashion as purchases book is prepared. In the details column it contains the names of those parties, whom goods have been returned. It also contains the details of goods returned. If the supplier had allowed trade discount at the time of purchases, it will also be shown at the time of returning goods. Purchases return is also known as returns outward because goods brought inside the business at the time of purchases are being sent outside the business to supplier. This is the return of goods 9utside the business, so it is also known as returns outward. In case of goods returned tQ supplier we send a Debit Note to the supplier indicating that the Supplier’s Ale has been debited with price of goods returned. While preparing Purchases Return Book the Debit Note No. is mentioned. It has got a separate column for Debit Note Numbers. Preparation of purchases return book is explained by the following illustration.

Illustration 3_ Prepare Purchases Returns Book/Journal from the following transactions:

2006

March 4           Returned to M/s Garg & Co., Chandigarh: (Debit Note No. 225)

2          Collapsible chairs @ $ 200 each

March 8           Returned to M/s Aggarwal Furniture, Chandigarh: (Debit Note No. 245)

4          Chairs @ $ 150 each

Less: 10% Trade Discount

March 15         Returned to M/s Jain Ltd., Chandigarh (Debit Note No. 315)

1                    Steel Almirah of $ 4,000.

Solution.

                        Purchases Returns Journal/Returns Outward Book

                                                                                                               

                                                                                                                        SALES RETURN BOOK

                                                                                                             (Or SALES RETURN JOURNAL)

Goods sold on credit to customers may be returned to us in the following cases :

l. Due to the defect in the goods.

2. Due to delay in the dispatch of goods.

3. Due to over-supply of goods.

4. Due to goods not being in accordance with the sample and specifications.

5. Due to violation of the terms of the contract.

Goods returned by the customers to us may also be known as ‘Returns Inward’ because goods once sent outward with the sales have been returned back and coming inside the business.

Sales return book has got almost the same columns as sales book. This book records the return of goods sold on credit only. This is not concerned with the return of assets _or return of goods sold for cash. After accepting the goods returned by customer. We issue a Credit Note to him indicating that the customer’s A/c has been credited for the goods returned by him. While Preparing Sales Return Book Credit Note No. is also referred, therein. The preparation of sales return book has been explained with the help of following illustration.

Illustration 4. Enter the following transactions in the Sales Returns Book :

2006

Jan. 9               Returned by M/s Gape & Co. (Credit Note No. 308)

20 bags Coffee @ $ 300 per bag

10 chests Tea @ $ 400 per chest

Jan. 17             Returned by M/s Ankita & Sisters (Credit Note No. 412)

15 tins Ghee @ $ 500 per tin

Less: Trade discount 10%.

Solution.

                                    Sales Return Book/Journal

Illustration 5: Enter the following transactions in proper Subsidiary Books of Ram : 

2001 

Jan. 1  Sold goods to John………………………………………………………………………..525 

Jan. 1  Bought of David……………………………………………………………………………780 

Jan. 2  John returned goods………………………………………………………………………75 

Jan. 2  Sold to Ankit………………………………………………………………………………..550 

Jan. 2  Purchased goods from lmtiyaz……………………………………………………………700 

Jan. 4  Returned goods to lmtiyaz…………………………………………………………………100 

Jan. 4  Bought of Naresh……………………………………………………………………………325 

Jan. 4  Sold to Ashok……………………………………………………………………………….350 

Jan. 5  Ashok returned goods……………………………………………………………………..45 

Jan. 6  Sold tb Abhay………………………………………………………………………………500 

Jan. 6  Sold to Anil…………………………………………………………………………………300 

Jan. 7  Abhay returned goods……………………………………………………………………..50 

Jan. 7  Bought of Naresh………………………………………………………………………700 

Jan. 8  Re1umed goods to Naresh…………………………………………………………….75 

Jan. 9  purchased goods from Anshu subject to a trade discount of 10%…………………1,000 

Jan. 10            Sold to James goods subject to 1rade discount of 5%………………………………..500 

Solution:

          Purchases Book

Sales Book/Sales Journal

Purchases Return Book/Journal

Sales Return Book/Journal