An example of entries being made in a Purchases Day Book. Image credit rtahosting.co.uk
ZIMSEC O Level Principles of Accounts Notes: Purchases Journal and the Purchases Ledger
As has already been said transactions are first recorded in source documents for example receipts and invoices
They are then collated into a day book probably at the end of each day.
The daily totals for each period are then posted to the various ledger accounts for example the Purchases Account in the General Ledger.
Yes the Purchases Account is found in the General Ledger and not in the Purchases Ledger which contains accounts of the business’s Trade Creditors.
The Purchases Day Book is thus merely a list of details relating to each credit purchase as obtained from the source documents usually a purchases invoice.
The Purchases Day Book is also known as the Purchases Journal.
It contains the date of the transactions, their details ( i.e. the name of the person or business that supplied the goods), folio column recording the reference to the corresponding double entry account so as to make finding it easier.
There are two ways view to every transaction.
If J Jimu buys goods on credit from S Muti for $500 :
In the eyes of S Muti this is a Sale and the transaction is recorded in the Sales Ledger after a Sales invoice has been issued and the transaction recorded in the Day Book on the other hand
In the eyes of J Jimu this is a purchase for which he receives a Purchases.
In this topic we will look at transactions from the perspective of the business buying goods for resale.
These are purchases.
When a purchase is made on credit the purchasing business is issued with a Purchase Invoice.
Each invoice on a particular date is recorded in the Purchases Day Book.
The credit purchases are posted one by one, to the credit of each supplier’s account in the Purchases Ledger.
A total tally of Purchases is made at the end of each day in the Purchases Day Book.
The totals are then added up at the end of each period for example month and posted to the debit side of the Purchases Account in General Ledger at the end of the period.
Cash Purchases are not recorded in the Purchases Day Book.
A cash sale is one for which cash or a cheque (or other means or payment) are made immediately before or after the goods have been received.