Purchase day book and Purchase day book and Purchase ledgerPurchase ledger

Purchase day book and Purchase day book and Purchase ledgerPurchase ledger

DBS3024 BUSINESS TRANSACTIONDBS3024 BUSINESS TRANSACTION

byStephen Ong

Visiting Fellow, Birmingham City University Business School

Visiting Professor, Shenzhen University

Today’s Overview Today’s Overview

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Learning objectivesLearning objectives Make the appropriate entries relating Make the appropriate entries relating

to credit purchases in a purchases to credit purchases in a purchases day bookday book

Make the correct postings from the Make the correct postings from the purchases day book to the purchases purchases day book to the purchases ledger and general ledgerledger and general ledger

Explain the differences between the Explain the differences between the processes of recording credit sales processes of recording credit sales and credit purchases in the booksand credit purchases in the books

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Purchase invoicesPurchase invoices Purchase invoices are sent to the Purchase invoices are sent to the

buyers of any goods that have been buyers of any goods that have been bought on credit.bought on credit.

Any sales invoice issued by a business Any sales invoice issued by a business is a purchase invoice when received by is a purchase invoice when received by the buying business.the buying business.

The buyer enters the purchase invoice The buyer enters the purchase invoice into a into a purchase day book purchase day book before before recording the details using double recording the details using double entry bookkeeping.entry bookkeeping.

DocumentationDocumentation

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Purchase day bookPurchase day book

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Posting credit purchasesPosting credit purchasesFrom the purchases day book:From the purchases day book:

The credit purchases are The credit purchases are posted individually to the posted individually to the credit credit of each supplier’s account in of each supplier’s account in the purchases ledger.the purchases ledger.

The total of the credit The total of the credit purchases is posted to the purchases is posted to the debit of the purchases account debit of the purchases account in the general ledger.in the general ledger.

Purchase invoices – sequence of events

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44ActivityActivity

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ActivityActivity

Post the purchases day book to the Post the purchases day book to the supplier accounts in the purchases supplier accounts in the purchases ledger and the purchases account in the ledger and the purchases account in the general ledger.general ledger.

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Activity (Continued)Activity (Continued)

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Learning outcomesLearning outcomes

You should have now learnt:You should have now learnt:

1.1. That ‘purchases day book’ and That ‘purchases day book’ and ‘‘purchases journalpurchases journal’ are different names ’ are different names for the same bookfor the same book

2.2. That That cash purchases are not cash purchases are not entered in entered in the purchases day bookthe purchases day book

3.3. That the purchases day book is a list of That the purchases day book is a list of all all credit purchasescredit purchases

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Learning outcomes (Continued)Learning outcomes (Continued)

4.4. That the purchases day book is That the purchases day book is used to post the items to the used to post the items to the personal accounts in the personal accounts in the purchases ledgerpurchases ledger

5.5. That the total of credit purchases That the total of credit purchases for the period is posted from the for the period is posted from the purchases day book to the purchases day book to the debit of debit of the purchases account in the the purchases account in the general ledgergeneral ledger

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Learning outcomes (Continued)Learning outcomes (Continued)

6.6. How to make the appropriate How to make the appropriate entries relating to credit purchases entries relating to credit purchases in a purchases day book and make in a purchases day book and make the correct postings from it to the the correct postings from it to the purchases ledger and the general purchases ledger and the general ledgerledger

7.7. That the process of making entries That the process of making entries in the books of the purchaser is in the books of the purchaser is very similar to that of making those very similar to that of making those in the books of the sellerin the books of the seller

Resources : Core ReadingResources : Core Reading

Wood, Frank and Robinson, Sheila Wood, Frank and Robinson, Sheila (2009) (2009) Bookkeeping and Accounts Bookkeeping and Accounts ,7,7thth Edition, Pearson/ FT Prentice HallEdition, Pearson/ FT Prentice Hall

Wood, Frank and Sangster, Alan (2012) Business Accounting ,12th Edition, Pearson/ FT Prentice Hall

Fortes, Hilary (2011) Accounting Simplified , Pearson/ FT Prentice Hall

QUESTIONS?QUESTIONS?