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Purchases Journal / Purchases Day Book

The purchases journal also called purchases day book or purchases book is a book of original entry which a firm uses to record its credit purchases but not cash purchases before they are posted to the ledgers. The journal records purchases of goods for resale, or components and parts for inclusion in finished products for sale.  It does not record any other type of goods which the company does not normally deal in. If it includes other purchases such as office supplies, they have to be shown in separate column(s) in the purchases journal.

The purchase invoices for goods bought on credit provide the details for daily entries in the purchases journal. It is not necessary to record details of the goods bought in the purchases journal as they are available on the invoices.

The following entries are made in the purchases journal:

  • Date
  • Reference number of the invoice
  • Name of the supplier
  • Ledger folio
  • Amount of the invoice


Format of purchases day book or purchases journal

Purchases Day Book / Purchases Journal

Date

Particulars

Inv. No.

Folio

Amount

20XX
Aug 04
Aug 16
Aug 25
Aug 30


King Kong & Co.
George Bush
Lot & Tot Trading
Big Bang Bros



00701
00702
00703
00704


PL24
PL60
PL75
PL83

$
4,200
1.600
2,500
3,000


Transferred to Purchases Account


GL55

11,300

The purchases journal is a source for posting to the accounts in the ledgers. It is totalled at the end of an accounting period which is usually a month. The total is the total amount of the goods purchased on credit for the particular period.


Posting to the ledgers

Each day the purchases are individually credited to the respective accounts of the suppliers in the purchases ledger.

At the end of the accounting period:

  • Debit the total of the purchases journal to the purchases account in the general ledger.
  • Credit the total of the purchases journal to the accounts payable account or the creditors account in the general ledger.

Each debit entry to the purchases account and accounts payable account increases their totals.


General Ledger

Purchases Account

20XX
Aug 31


As per Purchases Journal

Folio
PDB13

$
11,300






Purchases Ledger

King Kong & Co.





20XX
Aug 04



Purchases

Folio
PDB13

$
4,200

George Bush





20XX
Aug 16



Purchases

Folio
PDB13

$
1,600

Lot & Tot Trading





20XX
Aug 25



Purchases

Folio
PDB13

$
2,500

Big Bang Bros





20XX
Aug 30



Purchases

Folio
PDB13

$
3,000


The following purchases journal shows the inclusion of purchase of an asset which is not something bought for resale. This item is therefore entered in a separate column. The purchases entries are individually posted as they happen to the respective accounts of the suppliers in a subsidiary ledger. At the end of the accounting period, the total of the purchases column is debited to the purchases account in the general ledger. The totals of the accounts payable column and the machinery column are credited to accounts payable account and the machinery account respectively in the general ledger.

Date Suppliers

Inv No.

Folio

Accounts

Payable

Purchases Machinery
20XX
Oct 12 Sirius & Bros 01001 PL22 800 800
Oct 14 Canopus Store 01002 PL55 600 600
Oct 23 Arcturus Co. 01003 GL13 950 950
Oct 30 Centauri Trading 01004 PL81 550 550
2,900 1,950 950


General entry for the purchase of the above-mentioned machinery

Date Particulars Debit Credit
20XX
Oct 23 Machinery 950
Arcturus Co 950
(Being purchase of machinery on credit)

Last Updated (Thursday, 09 September 2010 03:52)