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Accounting Process- Subsidiary Books

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Recording of Special Transactions of Accounting in Saparate books, includes :
1."Cash Book" for Cash, Bank & Discount transactions
2. "Purchase Book" for Credit purchases of goods
3. "Returns Outward Book" for Return of Credit purchases goods
4. "Sales Book" : Credit Sale of goods
5."Return Inwards Book" for Return of Credit Sold goods; 6. "Bills Receivable" book: Details of Bills drawn &
7. "Bills Payable" Book.
8. "Journal Proper": for the remaining Transactions.
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Accounting Process- Subsidiary Books

  1. 1. SUBSIDIARY BOOKS
  2. 2. As all the transactions are recorded in Journal (without any sequence) It is Convenient to maintain some “Subsidiary ( Supporting/Ancillary/Memorandum) books to help the “Journal” for some special/frequent transactions It is part of recording (books of Original/Prime entry), followed by Classification
  3. 3. Division of Work Time Saving Expertise, Efficiency Easy accessibility of Information Easy error detection
  4. 4. Cash Book Sale Book Purchase Book Purchase Return Book Sales Return Book Bill Payable Book Bill Receivable book ( Note : All other entries done in “Journal Proper”)
  5. 5. A Subsidiary book- Records Cash/Cash Discount/Bank Transactions Also a Principal books(Serves the purpose of Ledger Account) Cash Book is prepared as a Cash A/c (It is both a Subsidiary & Principal book)
  6. 6. Main Cash Book Petty Cash Book Single Column Triple Column Cash Book Cash Book Double column Cash book
  7. 7. Shows the Receipts & Payments of only Cash (Hard Cash) Prepared on Cash basis ( Receipts- Dr. Side, Payments- Cr. Side) as a Ordinary Ledger A/C. Starts with Cash opening Balance (Dr. Side) & Ends with Closing Balance (Cr. Side) Always have a Debit Balance
  8. 8. It Records Cash & Cash discount Transactions Discount (Dr. Side) – Discount allowed Discount (Cr. Side) – Discount Received Discount columns are not balanced , only totaled (Note : Cash Discount : Discount for early recovery/payment of Cash) (Trade Discount- a quantity discount for sale/purchase of bulk quantity) (Never Recorded separately anywhere )
  9. 9. Date Particulars J.F Cash Discount (allowed) Dt Particulars J.F Cash Discnt ( Recd) Total Total
  10. 10. Columns for Cash, Discount & Bank Entries involving Cash & Bank (called as Contra Entries) “C” is written in L.F. Column If cheque deposited on different date Ist Entry : as cash receipt IInd Entry : as Cash deposit
  11. 11. 2016 Jan.1 Mr. Malhotra commences business with Cash 20,000 “3 He paid into Current A/c 19,000 “4 He received cheque from Rahul & Co. on account 600 “7 He pays in bank Rahul & Co’s cheque 600 “10 He pays Shyam & Co. by cheque and is allowed discount ` 20 330 “12 Kapoor & Co pays into his Bank A/c 475 “15 He receives cheque from Rahul and allows him discount ` 35 450 “20 He receives cash ` 75 and chequè 100 for cash sale “25 He pays into Bank, including cheques received on 15th and 20th 1,000 “27 He pays by cheque for cash purchase 275 “30 He pays sundry expenses in cash 50
  12. 12. Small Cash expenses are recorded (often incurred in the business, like conveyance, courier,etc.) Imprest System : Every month the closing balance of cash is calculated, & at the beginning of next month, Petty cashier is received net amount(Monthly amount – Costing cash) Prepared in two ways : Analytical Cash book Simple Cash book.
  13. 13. Started with the Cash Received periodically by the Main Cashier Petty expenses are written (both in Total column & specific column) We get the total petty expenses incurred of the period & the total of head wise expense.
  14. 14. Division of work Saving of time Less Burden Control over small payments Check on the junior Cashier
  15. 15. Shri Ramanathan maintains a Columnar Petty Cash Book on the Imprest System. The imprest amount is ` 500. From the following information, show how his Petty Cash Book for the week ended 12th September, 2015: 7/9/2015 8/9/2015 9/9/2015 10/9/2015 11/9/2015 12/9/2015 12/9/2015 Balance in hand Received Cash reimbursement to make up the imprest Stationery Miscellaneous Expenses Repairs Travelling Stationery Miscellaneous Expenses Repairs 134.90 365.10 49.80 20.90 156.70 68.50 71.40 6.30 48.30
  16. 16. Recording the purchase of goods on credit only No Cash purchases No Purchase of assets (Cash Book) ( Journal Proper) prepared as an invoice (the name of supplier, description of goods purchased)- Not an A/c Trade discount received (on Bulk Purchases) Deducted from Gross Purchases
  17. 17. Vat Paid is added to the Net Purchases (After discount) Separate Column for Vat paid on purchases (Vat Receivable)- Cenvat Credit receivable (Shown as Assets) Separate column for incidental expenses on purchases like Freight Total of respective columns-transferred to their Ledger Accounts (Total of purchases to Purchases Account)
  18. 18.  There can be eight columns: a. Date b. Particulars c. Ledger Folio d. Invoice No. e. Details f. Amount (Net Purchases) g. VAT Paid h. Expenses
  19. 19. Present the Journal Book: April 4 April 15 April 28 Purchased from Ajay Enterprises, Delhi 100 Doz. Rexona Hawai Chappal @ ` 120 per Doz. 200 Doz. Palki Leather Chappal@ ` 300 per Doz. Less : trade discount @ 10% Freight charged ` 150. Purchased from Balaji Traders, Delhi 50 Doz. Max Shoes @ ` 400 per Doz. 100 pair Sports Shoes. @ ` 140 per paid. Less : trade discount @ 10%. Freight charged ` 200. Purchased from Tripti Industries, Bahadurgarh 40 pair leather shoes@ ` 400 per pair 100 Doz. Rosy Hawai Chappal@ ` 180 per Doz. Less : trade discount @ 10%. Freight charged ` 100. Purchases are subject to Sales Tax @ 10%.
  20. 20. Recording the Sale of goods on credit only No Cash Sales No Sale of assets (Cash Book) (Journal Proper) prepared as an invoice (the name of supplier, description of goods Sold)- Not an A/c Trade discount allowed (on Bulk Sales) Deducted from Gross Sales
  21. 21. Vat Received (from Customers) is added to the Net Sales (After discount) Separate Column for Vat received on Sales (Vat Payable)- Shown as Liability (paid to Govt. after claim Cenvat) Total of respective columns-transferred to their Ledger Accounts (Total of Sales to Sales Account)
  22. 22. Prepare the Sales Book: February 2, 2016 : Sold to South Indian Toys 500 toys @ ` 60 each; Less: Trade Discount @ 5%; Sales tax to be charged @ 10%. February 10, 2016 : Sold to Ria Sisters 100 kg. of wheat @ ` 40 per kg.; Less: 5% Trade Discount; Sales tax charged @ 5% . February 15, 2016 : Sold to Raj Bros. 20 bags of White Cement Powder; @ ` 2,000 per bag; Less: 2% Trade Discount; Sales tax @ 8%. February 27, 2016: Sold to Sen & Co. 10 chests of tea @ ` 500 per chest less 10% Trade Discount; Sales tax is charged @ 5%.
  23. 23. Records the details of goods returned (purchased on credit) to the suppliers(Creditors) “ Returns Outward book” Prepared like a Purchase book Proportionate discount on the goods returned is also to be adjusted. On return, a debit note will be sent to the supplier (along with the goods)
  24. 24. Records the details of goods returned (purchased on credit) by the Customers(Debtors). “ Returns Inward book” Prepared like a Sale book Proportionate discount on the goods returned is also to be adjusted. On return, a Credit note will be sent to the Customer
  25. 25. If the firm have a number of Bill receivables (signed by their Debtors) due to be collected. The book contains: Name of the acceptor, date of receipt of the bill, term of the bill, due date, Amount, etc. The total of the amount column of the bills receivable book is debited to bills receivable account
  26. 26. If the firm have a number of Bill Payables accepted due to be Paid (to Creditors). The book contains: Name of the Payee, date of acceptance, term of the bill, due date, Amount, etc. The total of the amount column of the bills Payable book is debited to bills receivable account
  27. 27. For Entries other for which there is no special book. Opening Entries Closing Entries Rectification Entries Adjusting Entries Transfer Entries Others
  28. 28. Other than these 7 subsidiary books, there may be any other subsidiary book like Sales on Approval/Return basis book. (if their transaction are frequent & Often)
  29. 29. Q.1. The primary record of a credit purchase of a fixed asset is made in — Cash book Sales book Purchases book Journal proper D
  30. 30. Q.2. What is the order in which the accounting transactions and events are recorded in the books? Journal, Subsidiary books, Ledger, Balance sheet, Profit and loss account Ledger, Journal, Ledger, Balance sheet, Profit and loss account Journal, Ledger, Profit and loss account, Balance sheet Profit and loss account, Ledger, Balance sheet, Journal C
  31. 31. Q.3. Which of the following is a credit transaction? Sold goods Sold goods for cash Sold goods to a customer for cash Sold goods to a customer D
  32. 32. Q.4. Sales Book is used to record – All sales of goods All credit sales All credit sales of assets other than goods All credit sales of goods. D
  33. 33. Q.5. When the goods are returned to a supplier - An invoice is sent to him A debit note is sent to him A credit note is sent to him A receipt is sent to him. B
  34. 34. Q.6. Which of the following is recorded as Contra Entry – With drew from bank for personal use Cheque received from X lodged into bank on same day Cheque received from Y before ,now lodged into bank A customer directly deposited in our bank account C
  35. 35. Q.7. Ram is debtor for Rs. 500 ,received a cheque for Rs. 480 from him in full settlement and deposited into bank on the same day .Its entry in 3-column Cash book is – In Dr. side of cash column and discount column In Dr. side of cash and Cr. Side of discount column In Dr. side of Bank column and discount column In Dr. side of Bank & Cr. Side of discount column C
  36. 36. Q.8. The periodic total of purchase day book is posted to Debit side of purchase a/c Debit side of trading a/c Credit side of creditors a/c Credit side of sales a/c A
  37. 37. Q.9. Which of the following a/c has a credit balance? Purchase a/c Sales a/c Goodwill a/c Cash in hand a/c B
  38. 38. Q.10. Provision for bad debts is journalized in General journal Debtors a/c Directly in profit and loss a/c Any of the above three A
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