Books of prime entry and ledgers principles of accounting

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Books of Prime entry and ledgers - Principles Of Accounting

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http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Books of Prime entry and ledgers

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Books of prime entry are the books in which transactions are first recorded. These are not accounts; they are simply books that records the details of transactions, almost like a diary. The firm will have a separate book for each kind of transaction. The type of the transaction will affect which book it, is entered into. Sales will be entered in one book, purchases in another book, cash in another book, and so on. Books of prime entry are also known as books of original entry or subsidiary books. Types of books of prime entry Books of prime entry are also known as either ‘journals’ or ‘daybooks’. The term ‘day book’ is, perhaps, more commonly used, as it more clearly indicates the nature of these books of prime entry – entries are made to them every day. The commonly used books of prime entry are: Book of prime entry Sales daybook (Sales journal)

Type of transaction for credit sales

Purchases daybook (Purchases journal) Sales Returns daybook (Sales Returns journal)

for credit purchases for returns from customers

Purchases Returns daybook (Purchases Returns journal) Cash book

for returns to suppliers for receipts and payments of cash

and cheques General journal (The journal) for other transactions The cashbook is a combined account of the cash account and the bank account. It is the only one of the six daybooks that is both an account and a daybook at the same time. Apart from the cashbook, all the other double-entry accounts are kept in one of the three ledgers.

/ http://www.principlesofaccounting2.com/ LEDGERS The different types of ledgers most businesses use are:

Sales ledger: This is for customers’ (Trade receivables) personal accounts Purchases ledger: This is for suppliers’ (Trade payables ) personal accounts General ledger : This contains the remaining double entry accounts, such as those expenses, sales, purchases, fixed assets, and capital

Sales Journal/ Sales Day Book:

relating to

For recording credit sale of goods only.

Cash sales of goods and sale of assets, either on credit or for cash, are not recorded in this journal

Assignment Questions: Q. 1 Prepare Sales Journal from the following transaction for the month of March 2006. 2006 Jan

1 sold goods to Jam $ 10,000

Jan

7 Sold goods for cash $ 5,000

Jan

9 sold goods to X, 300 Tables @ $ 100 each

Jan

15 sold goods to Jill, 100 Chairs @ $ 50 each

Jan

20 Bought goods for cash $ 3,000

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Jan

25 sold goods and received Cash $ 500

Jan

30 Sold goods to Anil $ 4,000

And post them to the relevant ledgers.

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Books of Prime entry and ledgers - Principles Of Accounting

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Q. 2 Prepare Sales Journal from the following transactions for the month of February 2006. 2006 Feb1

Cash Sales $ 5,000

Feb5

Sold goods to Tin, 100 Wall clocks @ $ 100 each less 5% Trade discount

Feb7

Sold goods to Sam, 200 Floor mats @ $ 50 each

Feb9

Bought goods from Jill, 150 Tyres @ $ 50 each less 10% Trade discount

Feb15 Bought a Motor Van $ 15,000 Feb20 Sold goods to George

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 50 Motor cycles @ $ 10,000 each less Trade discount 10% Feb25 Sold goods to Albert

100 Tape recorders @ $ 500 each less Trade discount 5% Feb27 Cash sales $ 7,000 Feb28 Sold goods on Credit to Zet $ 10,000 Post them to concerned ledgers.

Q. 3

Prepare Sales Journal from the following transactions for the month of January 2003:

2003 January 1

Sold goods on credit to Samson:

200 Tube Lights @ $10 each less 10% trade discount. 4

Sold goods on credit to Anson:

100 Table fans @ $100 each less 20% trade discount. 5

Cash Sales $ 7,000

7

Sold goods to Soson:

/ http://www.principlesofaccounting2.com/ Goods costing $4,000 less 25% trade discount 10 15

Sold a Motor Van $ 15,000 Cash sales $5,000

18

Credit sales to Alby $2,500 less $ 500 trade discount

20

Sold an asset to X for $ 10,000

21

Sold goods on credit to Adil agencies 500 Usha Fans @ $150 each

less 10% trade discount 30

Bought goods on credit from Lee $ 1,000

31

Credit sales to Samson $4,500 less $500 trade discount.

Q. 4

Prepare the sales journal from the following for the month of March 2002:

2002 March 1

Credit sales to Mohamed:

200 Ball point pens $25 each less 10% trade discount 5

Credit sales to Anitha:

1000 reams of white papers @ $50 each ream less 25% trade discount 9

Credit sales to Soothy $5,000 less $ 500 trade discount

15

Sold goods on credit to Sathya:

400 ruled note books @ $20 each less 25% trade discount 24

Credit sales to Milton $4,500

31

Sold on credit to Allen goods after deducting trade discount $3000

Post the entries to the ledger accounts on 31st March 2002

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Purchase Journal/ Purchase Day Book:

For recording the credit purchase of goods only. Cash purchase of goods and

purchase of assets, either on credit or in cash, are not recorded in this journal.

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Books of Prime entry and ledgers - Principles Of Accounting

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Assignment Questions:

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Q. 1

Write a short note about the Purchases Return Journal.

Q.2. Prepare Purchases Journal from the following transactions for the month of April 2005

2005 April 1Bought goods on credit from Thomas costing $ 15,000 April 5 Credit purchases of goods from Jones 700 tables @ $ 50 each April 12 Credit purchases of goods from Albert 200 items @ $ 30 each April 15 Credit purchases of Furniture from Dave costing $ 7,500 April 17 Bought on credit from Gordon 100 beds @ 1250 each April 20 Bought on credit from K.King 200 chairs @ $ 250 each April 25 Credit purchases from Alexander goods costing $ 30,000 April 28 Cash purchases from Roberts $ 15,000 Post the items to the concerned ledger account on 30th April 2005.

Q.3

Prepare Purchases Journal from the following transaction for the month of January 2005

/ http://www.principlesofaccounting2.com/ 2005

Jan 1 Bought goods on credit from Peter 200 items @ $ 25 each Jan 4 Cash Purchases of goods from steward $ 40,000 Jan 10 Credit purchases of goods from Smith $ 5,000 Jan 17 bought on credit from David 400 items @ $ 30 each. Jan 19 bought a motor can on credit from Oliver $ 2,000 Jan 20 bought goods on credit from Marshall 100 items @ $ 200 each Jan 25 Credit purchases of goods costing $ 25,000 from Adams. Post the items to the concerned ledger accounts on 31st January 2005.

Q. 4

Prepare Purchase Journal from the following transactions for the month

of January 2003: 2003 January 1

Bought goods on credit from Alwin:

800 Items @ $20 each, less 25% trade discount. 4

Bought goods on credit from Alby:

400 items @ $100 each, less 10% trade discount 5

Bought goods for Cash $ 5,000

7

Bought goods on credit from Amal:

400 items @ $30 each less 33 1/3 % trade discount

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 15 16

Bought Furniture for $ 10,000

Bought goods on credit from Vimal:

Goods costing $25,000 less $ 5,000 trade discount

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Credit purchases of goods from:

A.Allen $4,000 less trade discount Âź of the cost. 28

Purchases goods for cash $ 10,000

30

Bought goods on credit from Adil:

Goods costing $2,000 net of trade discount.

Q. 5

Following are the credit purchases of goods in a business for the month of April 2003

2003 April

1

Bought goods on credit from Bilton:

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 500 Chairs @ $1,000 each less 15% trade discount 5 7

Cash purchases $ 2,000

Bought 50 tables @ $500 each from Albert on credit net of trade

discount 14 21

Bought on credit from Bitson: 100 mattresses at $2,000 each less 25% trade discount. Bought on credit from Betsy 100 beds @ $1,500 each less 10% trade discount

25

Purchases a motor car on credit from X for $ 10,000

29

Credit Purchase from Binu, goods costing $20,000 less $ 2,000

Trade discount 30

Bought goods on credit from Bobby :- 100 fancy chairs @ $500 each less 30 % trade discount.

30

Credit purchases from Bimal $5,600 net of trade discount.

30

Purchased goods for cash $ 2,000

Post the items to the concerned ledger accounts on 30th April 2003 Returns Inwards Journal/ Sales Returns Day Book: For recording only the return of goods from the customers.

/ http://www.principlesofaccounting2.com/ Return Outwards Journal/ Purchase Return Day Book: For recording only the return of goods to the suppliers

Assignment Questions: Q. 1

Write a short note about the sales return journal.

Q. 2

Write a short note about the purchases return journal.

Q. 3

How does the sales journal differ from the purchases journal?

Select the correct answer: Q. 4 (a)

Q. 5

The number of subsidiary books in accounting are: Five

(b)

Two

(c)

Three

(d)

Six

The sales ledger contains:

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ (a) only debtors a/c

(b) both debtors & Creditors a/c

(c) only suppliers a/c

(d) none

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Books of Prime entry and ledgers - Principles Of Accounting

Q. 6

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The debtors ledger contains:

(a) customers a/c

Q. 7

(b)

creditors a/c

(c)

bankers a/c

(d)

suppliers a/c

The total of purchases returns day book should be shown in the

(a) sales ledger

Q. 8

(b) purchase ledger

(c)

suppliers ledger (d) general ledger

The document which is necessary for making entries in the sales journal is the

(a) purchases Invoice

(b)

voucher (c) sales Invoice

(d) none of these

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Q. 9

The purchase journal is a

(a) day book (b) ledger Q. 10

(c) account

The debit note is a document which is used for making entries in the

(a) sales Journal (c) returns Inwards Journal

Q. 11

(b) purchases Journal (d) returns Outwards Journal

The sales journal contains a list of

(a) cash sales

Q. 12

(d) none of these

(b) credit sales

(c) credit purchases

(d) cash purchases.

Asha sold goods on credit to Jisha for $2000 net of trade discount.

In which journal will this transaction be recorded by Jisha ? (a) The sales returns journal

(b) The purchases book

(c) The purchases returns book

(d) The cash book

Q. 13

The credit note number column is provided in the

(a) sales book

(b) sales returns book

/ http://www.principlesofaccounting2.com/ (c) purchases returns book

Q. 14 (a)

(d) purchases book.

The total of sales returns book is transferred to the debit side of the sales A/C in the general ledger

(b)

credit side of the sales A/C in the sales ledger

(c)

credit side of the sales A/C in the general ledger

(d)

none of these.

Q. 15

The proper journal is the other name of the

(a) general ledger

(b) general journal

(c) sales journal

(d) sales ledger

Q. 16

In which book is the debit note number column shown?

(a) Returns inwards book

(b) Returns outwards book

(c) General journal

(d) None of these

Q. 17

Goods are returned to Anil by Sunil. In which book will Sunil record this transaction?

(a) Sales journal (c) Returns outwards book

Q. 18

(b) Returns inwards book (d) General journal

Anil sold the following goods to one of his customers on credit.

200 sets of door mats @ $200 each less 25% trade discount. 100 mattress @$ 250 each, no trade discount What is the amount with which Anil will record this transaction?

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ (a)

$50000

Q. 19

(b) $53000

(c) $ 55000

(d) $ 58000

Which of the following is wrong?

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Books of Prime entry and ledgers - Principles Of Accounting

(a)

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The sales journal is a book of original entry

(b)

Cash sales of goods are recorded in the cash book.

(c)

Capital is the difference between fixed assets & current assets.

(d)

The purchases book is for recording credit purchase of goods on

Q. 20

Which of the following is correct ?

(a)

Purchases of assets are recorded in the sales book

(b)

Sale of goods on credit are recorded in the cash book.

(c)

Current assets are also known as circulating assets.

(d)

Return of goods to the suppliers are recorded in the sales returns book

Q. 21

The journal is a

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ a)

part of the double entry system

b)

part of the cash book

c)

not a part of the double entry system

d)

none of the above.

Q. 22 a) c)

Q. 23

A credit note issued by us will be entered in the returns outwards a/c purchases a/c

b) d)

returns Inwards a/c

sales a/c

A firm sells goods on credit. Which document does the firm use to record this?

a)

Purchases invoice

b

)Sales invoice

c)

Credit note

d)

Debit note

Q. 24

A firm buys goods on credit.

/ http://www.principlesofaccounting2.com/ Which document does the firm use to record this transaction? a)

Credit note

c)

Purchase invoice

b)

Q. 25

Mr. M sends back $ 900 of faulty goods to Mr. N.

d)

Debit note

Sales invoice

In which book of prime entry would Mr. N record this transaction? a) c)

The general journal The sales return journal

b) The purchase return journal d) The sales journal

Q. 26 A book keeper discovers that an amount paid to a supplier has not been entered in the books of accounts. In which book of account should enter this? a)

Purchase ledger

b)

Creditors ledger

c)

General ledger

d)

None of the above.

Q. 27

Fill in the following with the most suitable terms

1)

Book of original entry is the other name for —————————-.

2)

In the purchases journal, the names of ————— are shown.

3)

The journal for recording returns of goods to the suppliers is —————-

4) The reduction allowed by the supplier from the list price of the goods is known as ———– ——— ———. 5)

The general journal is also known as —————————.

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 6)

The debtors ledger is also known as ——————-.

7)

—————— is the book in which a transaction is recorded first.

8)

The purchase ledger contains the accounts of ——————–.

9)

The debtors ledger contains the accounts of ———————-.

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Books of Prime entry and ledgers - Principles Of Accounting

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10)

The sales day book records all ————-

11)

The goods returned by customers into the business are recorded in the

————-

————-

—————– —- ——————— book. 12)

The credit purchase of an asset is shown in the ————————– journal.

13)

Credit sales of goods are recorded in the ————————— journal.

14) The total of the returns inwards journal is transferred to the —————- side of ————— a/c in the general ledger. 15) The total of the purchases journal is transferred to the ————– side of the purchase a/c in the — ——————- ———————-. 16)

Asset accounts are shown in the ————————– ledger.

17)

In book keeping there are ——————- subsidiary books.

18)

The general ledger is also known as ————————————-.

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Q. 28 Prepare the returns inwards and returns outwards journals from the following for the month of March 2002:2002 March 1

Returned goods to Mathew

$ 250

4

Rinu returned goods to us $ 450

8

Returned goods to Sojan $1000

15

Received goods returned by Sunil $800

21

Returns outwards to Minu $500

31

Returns inwards from Tinu $700

Show the postings to the ledger accounts on 31st March 2002

Q. 29

Prepare returns inwards journal and returns outwards journal form the following

transactions for the month of November, 2002:-

/ http://www.principlesofaccounting2.com/ 2002 Nov 1

Returns inwards from Sanal $ 250

4

Returned to Amal, goods at list price $3000 less 20% trade discount.

7

Goods returned to Manu $ 600 list price, less 10% trade discount.

9

Bhimal returned goods at net of trade discount $ 450

15

Adil returned goods to us $ 200

19

Goods returned to Sunil $ 300

25

Returns outwards to Samuel $ 500

30

Returns inwards from Excell $ 1500

Show the postings to the ledger accounts on 30th Nov 2002 Q. 30

The following transactions have been taken from the books of a business

2003 January 1

Credit sales to K. Ball: 400 items @ $25 each, less 25% trade discount.

4

Credit purchases from M. Muthu 400 items @ $50 each

less 20% trade discount 6

Returns inwards from K. Ball 20 items (out of sales on 1st Jan)

7

Returns outwards to M. Muthu: 40 items (out of purchases on 4th Jan)

10

Credit sales to P.Poter 1,000 items @ $40 each less 10% trade discount.

13

Credit Purchases from T. Terry 300 items @ $30 each

less 25% trade discount. 14

Returns inwards from P.Poter: 100 items (out of goods sold on 10th January)

15

Returns outwards to T.Terry 100 items (out of goods bought from him

on 13th Jan.)

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 18

Credit sales to L.Lane $3,500 net of trade discount.

20

Credit purchases from S.Sita $7,000 net of trade discount.

24

Credit sales to K. Ball $10,000 less $1,000 trade discount

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Books of Prime entry and ledgers - Principles Of Accounting

25

Credit purchases from M.Muthu $12,000 less trade discount Âźth of cost

26

Returns inwards from L Lane $500 net of trade discount.

27

Returns outwards to S.Sita $1,500 net of trade discount.

28

Credit sales to P.Poter list price $ 8,000 less 20% trade discount.

31

Credit purchases from T.Terry list price $ 4,000 less trade discount 10%

Page 8 of 10

Prepare appropriate journals for recording the above transactions for the month of January 2003 and show the postings to the ledger on 31st Jan 2003.

Q. 31

The following information is related to the business of Ken

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 2002 March 1

Credit sales to Mathew $2,000 less $200 trade discount

2

Credit sales to David 200 items @ $20 each less 10% trade discount.

4

Credit purchases from Sunil 300 items @ $10 each less 20% trade discount.

5

Credit Purchase from Sajan 400 items @ $25 each less 10% trade discount

7

Returns inwards from Mathew $90 net of trade discount.

9

Returns outwards to David 10 items @ $ 20 each

less 10% trade discount. 12

Credit sales to Minu 500 items @ $50 each less 25% trade discount.

15

Credit purchases from Sunan $5,000 net of trade discount.

18

Returns inwards from Minu 100 items @ $50 each less 25% trade discount.

23

Returns outwards to Sunan $500 net of trade discount.

24

Credit sales to Naadhan $15,000 less $2,500 trade discount

26

Credit purchases from Sudha $10,000 less 10% trade discount

28

Returns inwards from Naadhan $1,000 less $ 250 trade discount

31

Returns outwards to Sudha $1,000 less 10% trade discount.

/ http://www.principlesofaccounting2.com/ Record the above transactions in the appropriate journals and post them to the ledger accounts on 31st March 2002.

Q. 32

The following transactions are taken from the books of a sole trader for

the month of January 2003 2003 January 1

Credit sales to Nisha:

20 sets of tube lights @ $100 each 30 table fans @ $300 each. Less 25% trade discount 4

Bought on credit from Asha:

100 colour television sets @ $1,000 each 200 table lamps @ $100 each. All less 20% trade discount 9

Returned goods by Nisha:

10 table fans of wrong colour (sold on 1st January) 15

Returned to Asha 10 colour televisions (bought on 4th January)

20

Credit sales to Jisha:

300 radios @ $ 400 each. Less 10% trade discount 150 sets of tube lights @ $100 each. No trade discount. 24

Bought on credit from Usha:

200 clocks @ $ 200 each, 50 table lamps @ $150 each. No trade discount. 26

Returns inwards from Jisha 30 radios (out of sales on 20th January)

31

Returned to Usha 5 clocks (out of purchase on 24th January)

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/

You are required to prepare the necessary journals and post the entries to the ledger accounts for the month of January 2003

Q. 33

Prepare:

a)

the purchases journal

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Books of Prime entry and ledgers - Principles Of Accounting

b)

the sales journal

c)

the purchase return journal

d)

the sales return journal

Page 9 of 10

for the month of July 2002 from the following transactions 2002 July 1

Credit purchase from Jackson:

1,000 clocks @ $210 each; 500 tape recorders @ $300 each. Less 331/3 % cash discount 7 Cash purchases from Jack:

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 700 table fans @ $200 each, 100 computer tables @ $150 each. Less 10% trade discount and 20% cash discount. 9

Sold goods on credit to Azleefa:

200 tape recorders @ $350 each and 20 table fans @ $250 each Less trade discount 25% and cash discount 10% 11

Credit sales to Arifa:

250 table fans @ $260 each, 300 clocks @ $240 each. Less 20% trade discount; 331/3 % cash discount. 14

Returned 20 table fans to Jack which were purchased on 07th July 2002

16

Azleefa returned 15 tape recorders and 5 table fans

21

Cash sales to Majeedha:

50 computer tables @ $180 each, 40 tape recorders @ $360 each 200 clocks @ $300 each. No trade discount. 25

Arifa returned $700 net of trade discount worth of goods to us.

27

Bought on credit from Firuza:

/ http://www.principlesofaccounting2.com/ 90 table lamps @ $ 200 each. Less 5% trade discount and 10% cash discount 28

Returned $300 net of trade discount value of goods to Firuza

29

Credit purchases from Nasreena $7,100 net of trade discount

30

Bought motor car on credit from Neema for $8,000

31

Sold goods for $ 6,190 to Zulfa on credit net of trade discount.

Q. 34

The following transactions are occurred in the business of Gilberth , a sole trader

for the month of 2003 January:-

2003 Jan. 1

Sold goods on credit to A.Allen:-

200 dozen red pens @ $ 60 per dozen 50 pairs of shoes @ $150 each Less 20% trade discount 4

Bought goods on credit from B.Bill:-

400 rulers @ $ 10 ea ; 50 dozen pencils @ $5 each Less $ 100 trade discount 12

Returns inwards from A.Allen 10 pairs of damaged shoes

18

Returns outwards to B.Bill: 50 broken rulers

24

Sold on credit to C.Clint:

1000 staplers @ $20 each less 10% Trade discount 500 erasers @ $5 each, no trade discount 28

Returns inwards from C.Clint : 100 staplers not up to the standard

29

Bought on credit from D.Darling

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 250 ball point pens @ $15each less 20% trade discount 100 dozen pencils @ $ 5 each less 10% trade discount

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Books of Prime entry and ledgers - Principles Of Accounting

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Returns outwards to D.Darling: 25 ball point pens

You are required to prepare the necessary journals for recording the above transactions for the month of January 2003 and show the postings to the ledger accounts on 31st January 2003

Q. 35

The following transactions are occurred in the books of a sole trader for the month

of December, 2002:2002 Dec 1

Credit sales to Mahesh 2000 items @ $ 10 each less 20% trade discount.

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 3

Credit purchases from Mann 400 items @ $ 25 each, less 25% trade discount.

5

Credit purchases from Mathew $20000, less 25% trade discount

7

Credit sales to Martin 600 items @ $ 50 each, less 5% trade discount

8

Returns inwards from Mahesh 100 items @ $10 each less 20 % trade discount

10

Returns outwards to Mann: 50 items @ $ 25 each, less 25% trade discount.

12

Returns outwards to Mathew $ 5000 less 25% trade discount

14

Returns inwards from Martin: 25 items @ $ 50 each, less 5% trade discount.

18

Credit purchases from Manju $ 8000, net of trade discount.

20

Credit sales to Mithun $ 6000 less $600 trade discount.

24

Returns outwards to Manju $2000, net of trade discount.

26

Returns inwards from Mothun $1000, less $ 60 trade discount.

29

Credit purchase from Manu $ 4000

30

Credit sales to Mahesh 500 items @ $10 each, less $500 trade discount

You are required to prepare the appropriate journals for recording the above transactions for the month of December 2002 and show the transfer of entries to the concerned ledger accounts

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