Prime entry books or books of original entry

Cambridge O level
National O Level
Edexcel O Level
7707
Prime Entry books
Books of Original Entry
Accounting
Introduction to Accounting
Accounting process

1. Prime Entry Books Sanjaya Jayasundara B.Sc.(Finance) Sp. University of Sri Jayewardenepura, ICASL Finalist, Investment Advisor , International School Teacher

2. Books of Prime Entry/ Books of Original Entry * Introduction * Sales Journal * Sales Returns Journal * Purchases Journal * Purchases Returns Journal Sanjaya Jayasundara ayojana.lk

3. Introduction Businesses use books of prime entry to record goods sold on credit, goods purchased on credit, sales returns, purchases returns and other transactions. These books are basically listing devices, which mean that a lot of detail is removed from the ledger. It also means that bookkeeping can be divided between several people. Books of prime entry are also known as books of original entry or subsidiary books. The name of these books has arisen because all transactions should be recorded in one of these before they are entered in the ledger. Sanjaya Jayasundara ayojana.lk

4. Transactions can be divided in to two….. 01) Cash Transactions 02) Credit Transactions Cash transactions are recorded in cash book and petty cash book. Credit transactions are recorded in following prime entry books. 01) Sales Journal 02) Sales Returns Journal 03) Purchases Journal 04) Purchase Return Journal 05) General Journal Sanjaya Jayasundara ayojana.lk

5. Sales Journal / Sales Day Book Sales Day Book is a prime entry book which can be used to record sales of goods on credit. * Source document is sales invoice. Sales Ledger Sales Journal A A/C B A/C Nominal/General Ledger C A/C Sales A/C Sanjaya Jayasundara ayojana.lk Date Name I. LF Amount 1/1 A A/C 2000 5/1 B A/C 3000 20/1 C A/C 4000 31/1 Transfer to Sales A/C 9000 1/1 Sales A/C 2000 5/1 Sales A/C 3000 20/1 Sales A/C 4000 31/1 Debtors 9000

6. Sales Journal * When goods are sold on credit, debit the customer’s account in the sales ledger with the total of the invoice (Net amount = Gross amount – Trade discount) on relevant date. * At the end of the month the total amount of sales journal should be credited to the Sales Account in the nominal/General ledger.  This will now form the double entry for all the individual debit entries in the sales ledger. Sanjaya Jayasundara ayojana.lk

7. Sales Returns Journal Sales returns journal (Sales returns book/ Returns inwards journal) is a prime entry book which can be used to record trade items returned by debtors/credit customers . * Source document is credit note. Sales Returns Journal A A/C B A/C Sales Returns Account C A/C Sanjaya Jayasundara ayojana.lk Date Name c LF Amount 5/1 A A/C 500 8/1 B A/C 1000 27/1 C A/C 1500 31/1 Transfer to Sales Returns A/C 3000 5/1 Sales Returns 500 8/1 Sales Returns 1000 21/1 Sales Returns 1500 31/1 Debtors 3000 Sales Ledger General Ledger

8. Sales Returns Journal * When goods are returned by a credit customer (Trade Receivable/ debtor ) , credit the customer’s account in the sales ledger with the total of the credit note on relevant date. * At the end of the month the total amount of Returns Inwards Journal should be debited to Returns Inwards Account in nominal ledger. * This will now form the double entry for all the individual credit entries in the sales ledger. Sanjaya Jayasundara ayojana.lk

9. Purchases Journal /Purchases Day Book Purchases Day Book is a prime entry book which can be used to record purchases of trade items on credit . * Source document is purchase invoice. Purchases Ledger Purchases Journal P A/C Q A/C Nominal Ledger R A/C Purchases A/C C A/C Sanjaya Jayasundara ayojana.lk Date Name I. LF Amount 2/6 P A/C 5000 9/6 Q A/C 7 000 16/6 R A/C 8000 30/6 Transfer to Purchases A/C 20000 2/6 Purchases A/C 5000 9/6 Purchases A/C 7000 16/6 Purchases A/C 8000 30/6 Creditors 20 000

10. Purchases Journal * When goods are purchased on credit, credit the supplier’s account (creditor’s account/Trade Payables Account) in the purchases ledger with the total of the invoice on relevant date. * At the end of the month the total amount of purchases Journal should be debited to the purchases account in nominal ledger. * This will now form the double entry for all the individual credit entries in the purchases ledger. Sanjaya Jayasundara ayojana.lk

11. Purchases Returns Journal Purchases Returns Journal (Purchases Returns Day Book / Returns Outwards Journal) is a prime entry book which can be used to record returns of trade items to suppliers by the business. * Source document is debit note. Purchases Ledger Purchases Returns Journal P A/C Q A/C Nominal Ledger R A/C Purchases Returns A/C C A/C Sanjaya Jayasundara ayojana.lk Date Name d LF Amount 5/6 P A/C 500 16/6 Q A/C 7 00 20/6 R A/C 800 30/6 Transfer to Purchases Ret. A/C 2000 5/6 Purch . Ret. A/C 500 16/6 Purch . Ret. A/C 700 20/6 Purch . Ret. A/C 800 30/6 Creditors 2000

12. Purchases Returns Journal * When goods are returned to a credit supplier (creditor), debit the supplier’s account in the purchases ledger with the total of credit note on relevant date. * At the end of month the total balance of Returns Outwards Journal should be credit to the Returns Outward Account in the nominal ledger. * This will now form the double entry to all the individual debit entries in the purchases ledger. Sanjaya Jayasundara ayojana.lk

13. Summary All transactions should be entered in a book of prime entry before they are entered in the ledger. The sales journal is written up from copies of invoices sent to customers (sales invoices) and the sales returns journal is written up from copies of credit notes sent to customers. The purchases journal is written up from invoices received from suppliers (purchases invoices) and the purchases returns journal is written up from credit notes received from suppliers (debit note). At the end of each month the totals of the sales, purchases and returns journals are transferred to the sales, purchases and returns accounts respectively. Sanjaya Jayasundara ayojana.lk

14. I wish you an enjoyable learning session…..! Sanjaya Jayasundara   “ The best investment is education.”