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- Books of original entry: day books and the journal
Books of original entry: day books and the journal
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Transactions are first listed in books of original entry. From there, totals and individual items are posted to the ledgers.
The day books
Sales day book: lists credit sales from sales invoices.
Purchases day book: lists credit purchases from purchase invoices.
Sales returns book (returns inwards): lists credit notes sent to customers.
Purchases returns book (returns outwards): lists credit notes received from suppliers.
Purchases day book: lists credit purchases from purchase invoices.
Sales returns book (returns inwards): lists credit notes sent to customers.
Purchases returns book (returns outwards): lists credit notes received from suppliers.
Posting from the day books
The journal
The journal records transactions that do not go in any other book of original entry, such as:
buying or selling non-current assets on credit, opening entries for a new business, writing off irrecoverable debts, correcting errors and year-end adjustments.
Each entry shows the account debited, the account credited, the amounts and a short narrative explaining it.
buying or selling non-current assets on credit, opening entries for a new business, writing off irrecoverable debts, correcting errors and year-end adjustments.
Each entry shows the account debited, the account credited, the amounts and a short narrative explaining it.
A business sells goods on credit to J Khan for £600. Which day book is used, and how is it posted?
- A credit sale goes in the sales day book.
- Debit J Khan's account; the total is credited to sales.
Answer: Sales day book; Dr J Khan £600, Cr sales £600
Day books list credit sales, credit purchases and returns. Totals go to the nominal ledger; individual items to customer and supplier accounts. The journal records unusual items such as non-current assets on credit, corrections and write-offs.
The interactive lesson includes the diagrams for this topic.
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