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Purchases Ledger

The purchases ledger/creditor ledger is a subsidiary ledger that records individual accounts of trade creditors from whom purchases have been made on credit, which means no immediate cash is paid out for the supply of the goods. If immediate cash payments are made for the goods, the suppliers do not appear in the purchases ledger as no debt is owed to them and it is not necessary to open accounts for them.

An invoice which to the purchaser is a purchase invoice is received when goods are bought on credit. The purchase invoices are used for writing up the purchases journal. From the purchases journal, postings are made to the purchases/creditors ledger as follow:

  • The credit purchases as entered in the purchases journal are credited one by one to the respective creditors’ accounts in the purchases ledger.
  • At the end of each period, usually a month the total of the credit purchases in the purchases journal is credited to the purchases account in the general ledger.

These are the entries which are usually found in a creditor’s account: purchases are credited and cash paid, discounts received and returns outwards are debited as shown here:


Purchases Ledger

Squirrel & Co

Date Particulars Folio Amount
Date Particulars Folio Amount
20XX

$
20XX

$
Jan 08 Bank
CB07 150
Jan 01 Balance b/d

450
Jan 19 Cash
CB17
300
Jan 14
Purchases
PL19 150
Jan 22 Discounts Rec'd
GL14
10
Jan 21 Purchases
PL19 200
Jan 25 Returns Outwards RO11 180




Jan 31 Balance c/d
310







950



950

Balance c/d (balance carried down) is the amount owed to the supplier. This amount is inserted into the account to make both the debit and credit sides equal in totals. The ‘balance c/d’ becomes ‘balance b/d’ (balance brought down) when it is copied on to the opposite side on the line immediately below the two totals to be the opening balance for the next period.

A purchases journal for posting

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


Postings from purchases journal:

General Ledger

Purchases Account

20XX
Aug 31


As per Purchases Journal

Folio
PDB13

$
12,900







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


Last Updated (Thursday, 21 October 2010 17:05)