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7/27/2019 Books of Prime Entry and Ledgers - Principles of Accounting
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Principles Of AccountingPrinciples of Accounting Made Easy
Home Topics Pricacy Policy Contact Us Search
Invoice Books Accounting Balance Sheet Recorded Books
Books of Prime entry and ledgers
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:
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.
LEDGERS
The different types of ledgers most businesses use are:
Sales Journal/ Sales Day Book: 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
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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Book of prime entry Type of transaction
Sales daybook (Sales journal) for credit sales
Purchases daybook (Purchases journal) for credit purchases
Sales Returns daybook (Sales Returns journal) for returns from customers
Purchases Returns daybook (Purchases Returns journal) for returns to suppliers
Cash book for receipts and payments of cash
and cheques
General journal (The journal) for other transactions
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 relating to
expenses, sales, purchases, fixed assets, and capital
Business reporting
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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
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:
Goods costing $4,000 less 25% trade discount
10 Sold a Motor Van $ 15,000
15 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
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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Assignment Questions:
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
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
15 Bought Furniture for $ 10,000
16 Bought goods on credit from Vimal:
Goods costing $25,000 less $ 5,000 trade discount
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26 Credit purchases of goods from:
A.Allen $4,000 less trade discount 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:
500 Chairs @ $1,000 each less 15% trade discount
5 Cash purchases $ 2,000
7 Bought 50 tables @ $500 each from Albert on credit net of trade
discount
14 Bought on credit from Bitson: 100 mattresses at $2,000 each less 25% trade discount.
21 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.
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 The number of subsidiary books in accounting are:
(a) Five (b) Two (c) Three (d) Six
Q. 5 The sales ledger contains:
(a) only debtors a/c (b) both debtors & Creditors a/c
(c) only suppliers a/c (d) none
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Q. 6 The debtors ledger contains:
(a) customers a/c (b) creditors a/c (c) bankers a/c (d) suppliers a/c
Q. 7 The total of purchases returns day book should be shown in the
(a) sales ledger (b) purchase ledger (c) suppliers ledger (d) general ledger
Q. 8 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
Q. 9 The purchase journal is a
(a) day book (b) ledger (c) account (d) none of these
Q. 10 The debit note is a document which is used for making entries in the
(a) sales Journal (b) purchases Journal
(c) returns Inwards Journal (d) returns Outwards Journal
Q. 11 The sales journal contains a list of
(a) cash sales (b) credit sales (c) credit purchases (d) cash purchases.
Q. 12 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
(c) purchases returns book (d) purchases book.
Q. 14 The total of sales returns book is transferred to the
(a) 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 (b) Returns inwards book
(c) Returns outwards book (d) General journal
Q. 18 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?
(a) $50000 (b) $53000 (c) $ 55000 (d) $ 58000
Q. 19 Which of the following is wrong?
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(a) 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
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 credit note issued by us will be entered in the
a) returns outwards a/c b) returns Inwards a/c
c) purchases a/c d) sales a/c
Q. 23 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.
Which document does the firm use to record this transaction?
a) Credit note b) Debit note
c) Purchase invoice d) Sales invoice
Q. 25 Mr. M sends back $ 900 of faulty goods to Mr. N.
In which book of prime entry would Mr. N record this transaction?
a) The general journal b) The purchase return journal
c) The sales 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 .
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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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 -.
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:-
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.)
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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25 Credit purchases from M.Muthu $12,000 less trade discount th 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%
Prepare appropriate journals for recording the above transactions for the month
of January 2003 and show the postings to the ledger on 31 st Jan 2003.
Q. 31 The following information is related to the business of Ken
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.
Record the above transactions in the appropriate journals and post them to the ledger accounts on 31stMarch 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)
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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b) the sales journal
c) the purchase return journal
d) the sales return journal
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:
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:
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
250 ball point pens @ $15each less 20% trade discount
100 dozen pencils @ $ 5 each less 10% trade discount
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31 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 Dec1 Credit sales to Mahesh 2000 items @ $ 10 each less 20% trade discount.
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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