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4
Sales and purchases day books
Sales day book
The sales book summarises the daily sales made on credit terms (i.e. the goods
are sold and payment is collected at a later date). Cash sales are recorded in
the cash book.
Date
Invoice
Customer
Ledger
Ref
$
4.1.X
8
1
Jake
RL3
4,500
4.1.X
8
2
Bella
RL18
3,000
4.1.X
8
3
Fizz
RL6
2,200
4.1.X
8
4
Milo
RL1
10,000
4.1.X
8
5
Max
RL12
500
–––––––
Total for 4.1.X
8
20,200
The total sales for the day of $20,200 will be entered into the accounting
ledgers in double entry format.
Chapter 3
KAPLAN PUBLISHING
43
Purchases day book
The purchase day book summarises the daily purchases made on credit terms
(i.e. the goods are purchased and payment is made at a later date). Cash
purchases are recorded in the cash book.
Date
Invoice
Supplier
Ledger
Ref
$
4.1.X
8
34
Harry
PL2
2,700
4.1.X
8
11
Ron
PL37
145
4.1.X
8
5609
Hermione
PL12
4,675
4.1.X
8
2
Neville
PL9
750
4.1.X
8
577
Draco
PL1
345
–––––––
Total for 4.1.X
8
8,615
The total purchases for the day of $8,615 will be entered into the accounting
ledgers in double entry format.
Sales and purchase returns day books
Format of the sales returns day book
Date
Invoice
Customer
Ledger
Ref
$
4.1.X
8
1
Max
RL12
50
4.1.X
8
2
Ernie RL2
450
4.1.X
8
3
Pat
RL20
390
4.1.X
8
4
Sam
RL27
670
4.1.X
8
5
Milo
RL1
2,300
––––––
3,860
Total for 4.1.X
8
Format of the purchases returns day book
Date
Invoice
Supplier
Ledger
Ref
$
4.1.X
8
112
Harry PL3
600
4.1.X
8
56
Cho
PL16
75
4.1.X
8
7
Fleur PL2
800
4.1.X
8
890
Neville PL1
50
4.1.X
8
12
Draco PL12
100
––––––
Total for 4.1.X
8
1,625
Double entry bookkeeping
44
KAPLAN PUBLISHING
Illustration 1
Mr
Kipper
Ling runs a business providing equipment for bakeries. He
always makes a note of sales and purchases on credit and associated
returns, but he is not sure how the transactions should be recorded for
the purposes of his accounts.
1 August
Mrs Bakewell purchases cake tins at a cost of $500.
1 August
Mr Kipper
Ling purchases equipment at a cost of $2,000
from wholesalers TinPot Ltd.
2 August
Mr Kipper
Ling returns goods costing $150 to another
supplier, I Cook.
3 August
Jack Flap buys equipment which cost $1,200.
3 August
Mrs Bakewell returns $100 of the goods supplied to her.
4 August
Victoria Sand
Witch buys a new oven for $4,000.
5 August
Mr Kipper
Ling purchases baking trays for $500 from
regular supplier TinTin Ltd.
8 August
Mr Kipper
Ling purchases ovens costing $10,000 from
Hot Stuff Ltd.
8 August
Mr Kipper
Ling returns equipment costing $300 to
TinPot Ltd.
9 August
Pavel Ova purchases goods costing $2,200.
11 August
Mrs Bakewell buys some oven
proof dishes costing
$600.
Write up the following credit transactions arising in the first two
weeks of August 20X6 into the relevant day books.
The key to this activity is to work methodically. You should deal with on
transaction at a time in date or sequential order.
Chapter 3
KAPLAN PUBLISHING
45
Solution to Illustration 1
Sales day book
Sales returns day book
Aug Customer
$ Aug Customer
$
1 Mrs
Bakewell
500
3
Jack Flap
1,200 3
Mrs Bakewell
100
4 Victoria
Sand
Witch 4,000
9 Pavel
Ova
2,200
11 Mrs
Bakewell
600
––––
––––
8,500
100
Purchases day book
Purchases returns day book
Aug Supplier
$
Aug Supplier
$
1
TinPot Ltd
2,000 2
I Cook
150
5
TinTin Ltd
500 8
TinPot Ltd
300
8 Hot
Stuff
Ltd
10,000
–––––
––––
12,500
450
5
The cash book
•
All transactions involving cash at bank are recorded in the cash book.
•
Many businesses have two distinct cash books – a
cash payments book
and a
cash receipts book
.
•
A note of cash discounts received is also recorded in the cash book. This
is to facilitate the recording of discounts in both the general and accounts
payable ledgers.
•
It is common for businesses to use a columnar format cash book in order
to analyse types of cash payment and receipt.
Note that accounting for discounts is considered in more detail in chapter 5
'Returns, discounts and sales tax'.
Double entry bookkeeping
46
KAPLAN PUBLISHING
Illustration 2 – The cash book
The cash payments book
The following is the cash payments book of a small print business.
Date Detail Bank Discount Payables Rent
$
$
$
$
18.7.X6
Mr A
1,400
100
1,400
18.7.X6
Office
3,000
3,000
18.7.X6
Mr B
210
210
18.7.X6
Mr C
1,600
80
1,600
18.7.X6
Shop
400
400
––––––
––––––
––––––
––––––
6,610
180
3,210
3,400
What are the accounting entries arising from the totals in the cash
book at the end of the day, assuming that control accounts are
kept?
Solution to Illustration 2
The cash transactions are recorded in total as follows:
Dr Payables ledger control account $3,210
Dr Rent expense $3,400
Cr Bank $6,610
The discount received is recorded as follows:
Dr Payables ledger control account $180
Cr Discounts received $180
Entries must also be made to Mr A, Mr B and Mr C’s individual accounts
in the accounts payable ledger in order to reflect the payments made and
discounts received.
Chapter 3
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47
Test your understanding 1
The following is the cash receipts book of the SM Art Gallery.
Date Detail
Bank
receipts
Receivables Bank
interest
$
$
$
18.7.X6 C
Monet
10,000
10,000
18.7.X6 Interest Acc # 1
20
20
18.7.X6 V V Gogh
25,000
25,000
18.7.X6 Interest Acc # 2
100
100
18.7.X6 P
Picasso
13,700
13,700
––––––
––––––
––––––
48,820
48,700
120
What are the accounting entries arising from the totals in the cash
book at the end of the day, assuming that individual accounts for
each customer and supplier are maintained?
Petty cash
Controls over petty cash
The following controls and security over petty cash should be found in a
business:
•
The petty cash must be kept in a petty cash box.
•
The petty cash box must be secured in a safe.
•
The person responsible for petty cash must be reliable and know
what he/she is doing.
•
All petty cash must be supported by invoices.
•
Petty cash vouchers must be signed by the claimant and the person
responsible for running the petty cash.
•
Regular spot checks must be carried out to ensure that the petty
cash is accurate.
Double entry bookkeeping
48
KAPLAN PUBLISHING
Petty cash book
In this book the business will record small cash transactions. The cash
receipts will be recorded together with the payments which will be
analysed in the same way as a cash book. An imprest system will be
adopted for the petty cash book. An amount is withdrawn from the bank
account which is referred as a ‘petty cash float’. This ‘float’ will be used to
pay for the various sundry expenses. The petty cash book cashier will
record any payments.
Any expenditure must be evidenced by an expense receipt and the petty
cashier will attach a petty cash voucher to each expense.
At any point in time the cash together with the expense vouchers should
agree to the total float. At the end of the period the petty cash float is
‘topped up’ by withdrawing an amount from the bank totalling the petty
cash payment made during the period.
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