Special Purpose/Other Subsidiary Books (Journals)

 Special  Purpose/Other  Subsidiary  Books  (Journals)

 All cash transactions are recorded in the cash book but out of non-cash transactions relating to goods in which a business enterprise deals are required to be recorded in the separate books popularly known as ‘other subsidiary books’. Rest of the non-cash transactions are recorded in the journal proper/ general journal / journal book.

Features of Special Purpose Books

Following are the features of special purpose books as described below:

(i) Speedy completion of accounting work When the accounting work is divided into journal and subsidiary books,  different  accounting  works can be delegated to  different  persons  who  ensure  speedy  completion of accounting work.

(ii) Similar transactions at same place All the information related to a particular nature can be obtained from a particular subsidiary book. e.g. any information about credit sales can be obtained from sales book.

(iii) Quick decisions Each subsidiary book provides detailed information about every type of transaction of a particular nature separately, so quick decisions can be taken by utilising the available information.

Types of Other Subsidiary Books

As it is difficult to record all the transaction in only one book of prime entry. Therefore, the journal is divided into a number of subsidiary books.

(i) Purchase Book (Journal)

All credit purchases of the goods in which a business enterprise deals are recorded in this book. The transactions are recorded on the basis of a source document, ‘Invoice’ received from the creditor (supplier) of the net amount after deducting trade discount from the gross amount.

Format of Purchase Book

Note (a) Cash purchases of goods are recorded in the cash book.

(b) Credit purchase of any item other than goods is recorded in the journal proper.

Ledger Posting of Purchase Book

(a) Total of purchase book is transferred periodically to the debit side of purchase account in the ledger book.

(b) Transfer from the purchase account is done immediately to the credit side of creditors’ account.

Difference between purchase book and  purchase account

• Purchase book  
• Purchase account

(i) It is a part of journal. 

(i) It is a part of ledger.

(ii) Purchase book does not have debit and credit columns. 

(ii) Purchase account has debit as well as credit columns.

(iii) Only credit purchase of goods are recorded.

  (iii) Cash purchases as well as credit purchases are recorded.

(iv) Trade discount is recorded in the purchase book.

 (iv)  Trade discount is not recorded in the purchase account.

(ii) Purchase Return/Return Outward (Journal)

The goods which were purchased earlier on the credit basis are returned to the supplier, such return of the goods is recorded in the purchase return book due to the reason like defects or inferior quality.

For this purpose, sender of the goods prepares debit note on the supplier to make a debit in his books. Sometimes, buyer may make credit note for the same purpose.

Format of Purchase Return Book

Note Cash purchase return of the goods, if any, are recorded in the cash book.

Ledger Posting of Purchase Return Book

(a) Total of purchase return book is transferred periodically to the credit side of purchase return account in the ledger book.

(b) Transfer from the purchase return book is done immediately on the debit side of supplier account.

(iii) Sales Book (Journal)

All credit sales of the goods (merchandise) in which a business enterprise deals are recorded in this book. The transactions are recorded on the basis of source document.

Seller prepares two copies of invoice, original is sent to the debtor (customer) and duplicate copy is retained to record the transaction in the books of accounts.

Format of Sales Book

Note (a) Cash sales of goods are recorded in the cash book.

(b) Credit sale of any item other than goods, is recorded in the journal proper.

Ledger Posting of Sales Book

(a) Total of sales book is transferred periodically to the credit side of sales account in the ledger book.

(b) Transfer from the sales book is done immediately the debit side of debtors account.

Difference between sales book and sales account

1. Sales book
2. Sales account

                                        ------------------

• It is a part of journal.
• It is a part of ledger.

 

• Sales book does not have debit and credit columns.
•  Sales account has debit as well credit columns.

 

• Trade discount is considered.
• Trade discount is not considered.

• Only credit sales are recorded.
• Cash as well as credit sales are recorded.

 

(iv) Sales Return/Return Inward (Journal)

The goods which were sold earlier on the credit basis are returned to us by customers, such return of the goods is recorded in the sales return book due to the reason like defects or inferior quality.

For this purpose, sender of the goods prepares credit note on the supplier to make a credit in his books. Sometimes, buyer may make credit note for the same purpose.

Format of Sales Return Book

Note Cash sales return of the goods, if any, are recorded in the cash book.

Ledger Posting of Purchase Book

(a) Total of sales return book is transferred periodically to the debit side of sales return account in the ledger book.

(b) Transfer from the sales return book is done immediately on the credit side of customer account.

(v) Bills Receivables Book

This book is prepared to record the details of the bills receivables duly accepted by our debtors. Such bills receivable also represent the amount to be received from the debtors.

The details include, date of bill drawn, date of acceptance, date of maturity, name of the acceptor (debtor), etc.

Format of Bills Receivables Book

Note As the bills receivables are retuned by the debtors after their acceptance, they are immediately recorded in the bills receivables book.

Ledger Posting of Bills Receivables Book

(a) The total of the bills receivable book is transferred to the debit side of bills receivables account on a periodic basis.

(b) Transfer from the bills receivable book is done immediately on the credit side of the debtor's account.

(vi) Bills Payables Book

This book is prepared to record the details of the bill payables duly accepted by us drawn by our creditors. Such bills payables also represent the amount to be paid to our creditors.

The details include, date of bill drawn date of acceptance, date of maturity, name of the drawer (creditor), etc.

Format of Bills Payable Book

Note As the bills payables are returned to the creditors after our acceptance, they are immediately recorded in the bills payable book.

Ledger Posting of Bills Payable Book

(a) The total of the bills payable book is transferred to the credit side of bills payable account on the periodic basis.

(b) Transfer from the bills payable book is done immediately on the debit side of creditors account.