Divisions of Subsidiary Books

This is the continuation of the the previous post. To read the Part, click here

The Subsidiary books are divided into six, which are sales day book, purchases day book, sales return, purchases return, general journal and cash book.

1. SALES DAY BOOK
It is a book of original entry in which credit sales are entered or recorded before posting to the ledgers. In the sales day book, cash transactions should and must not be recorded.
Equally sales of fixed assets must be excluded from the day book. The sales day book, also called sales journal, is not part of the double entry. The seller will enter the sales journal from the sales invoices.

Posting to sales day book
Total of sales day book will be transferred to the credit side of sales account in the general ledger and personal account debited. The act of entering in the customers account is referred to as ''posting''.

Trade discounts
This is the allowance of the selling price or catalogue price of goods supplied. It is normally given to the buyers by the producers or manufactures. Trade discounts are simply a percentage deduction from the retail price. Hence, no entry for should be made for it in the double entry records.

The procedures are as follows:
1. Invoices are typed, as and when sales occur.
2. The sales day book is entered daily.
3. The sales account in the general ledger is credited with the total.
4. the customers' account in the double entry system is debited.

2. PURCHASES DAY BOOK
This is the book for recording goods bought on credit from the sellers/suppliers and it can be referred to as purchases journal. Addition of the purchases journal is normally done weekly or monthly. The total will be posted to the debit of the purchases account in the ledger and credited to personal ledgers of suppliers. It has column for date, particulars, folio, details and total.

The procedures are:
1. Purchases day book is entered daily.
2. The purchases account in the general ledger is debited.
3. The suppliers' account in the double entry system is credited.

3. PURCHASES RETURNS BOOK
This is the book for recording goods returned to the suppliers as a result of one reason or the other e.g damages, defectiveness etc. It can also be referred to as Returns outwards day book. The treatment for discount will be the same with the treatment in the purchases day book.

The procedures are:

• Returns outwards book is entered immediately the goods are returned
• The returns outwards account in the general ledger should be credited.
• The suppliers account should be debited.

 4. SALES RETURNS JOURNAL
The sales returns journal is used to record goods returned by customers. It may be due to wrong types, wrong colour, breakage or inferior quality. It can also be called returns inwards journal.

The procedures are as follows:

• Returns inwards journal is entered immediately goods are returned.
• The returns inwards account in the ledger is debited.
• The customer's account is credited.

5. GENERAL JOURNAL OR JOURNAL PROPER
This is another book of prime entry in which the initial entries are recorded in chronological order. It can, in the same way, be defined as the daily records of transactions. It is used for opening entries, correction of errors etc.

6. CASH BOOK
This is a double entry account used in recording cash transactions as well as transactions with the bank. It is a subsidiary book and also performs the function of a ledger.