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Types of Subsidiary Book

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Special books are maintained on the basis of characteristics of financial transactions of a business enterprise. The special booksfalling under subsidiary books are as follows:

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Purchase Book

Purchase Book is the first entry of all goods purchased on credit. It is the primary record of all the credit purchases, which are either for reselling or further processing. It does not record cash purchase.

Example:
Ashoj 6 = Purchased from Kamala, Kathmandu 25 pieces of register@ Rs. 60 10 dozens of pencil @Rs.15
Ashoj 9 = Sarala, Balaju 20 pieces of board marker@Rs. 35 15 pieces of duster @Rs. 10

Purchase Book

Date

Particulars

In. no

L.F

Details

Total

Ashoj 6

Kamala, Kathmandu

25 pieces of register@ Rs. 60

1500

10 dozens of pencil@ Rs. 15

150

Less: Trade Discount@ 10%

165

1485

Ashoj 9

Sarala, Balaju

20 pieces of board marker@ Rs. 35

700

15 pieces of duster@ Rs. 10

150

850

Total

2335

Purchase Return Book

Purchase return book is the first entry of all goods returned to suppliers. It is the primary records of all the purchase returns. When the good purchased is found defective, damaged, in an excess quantity and not as per the order placed, they can be returned to the supplier. It is prepared on the basis of a debit note.

Example:
Jan 4 = Goods of Rs 1700 returned to Burning store, Baneshwor
Jan 16 = Returned to Shinning Store, Banepa 2 quintals Basmati rice@ Rs. 2800 25 kg Mansuli rice@ Rs. 22

Purchase Return Book

Date

Particulars

In. no

L.F

Details

Total

Jan 4

Burning Store, Baneshwor

1700

Jan 16

Shining Store, Banepa

2 quintals Basmati rice@ Rs. 2800 5600

25 kgs Mansuli rice @Rs. 22

550

6150

Total

7850

Cash Book

A cash book is the primary records of all the receipts and payments made in cash and through a bank. It has the features of the subsidiary book as well as the principal book. Mainly, it is a subsidiary book as it is the first entry of all the cash and banking transaction. It is a part of the principal book or ledger as it serves the purposes of cash and bank accounts in the ledger.

Sales Book

Sales book is the first entry of all the goods sold on credit. It is also known as sales journal. It is the primary record of all the credit sales. It does not record cash sales. It is prepared on the basis of the outward invoice sent out to the customer.

Example:
Kartik 29= Sold to Kriza, Basundhara 2 sets 20"LG TV@Rs. 17500 3 sets 21"Sony TV@ Rs. 27500
Kartik 30 = Sold to Nimisha, Kathmandu
5 pieces of calculator @Rs. 650 3 sets of Telephone @ Rs. 1050

Sales Book

Date

Particulars

In. no

L. F

Details

Total

Kartik29

Kriza, Basundhara

2 sets 20"LG TV@ Rs. 17500

35000

3 sets 21"Sony TV@ Rs. 27500

82500

Less: Trade Discount @12%

14100

103400

Kartik 30

Nimisha, Kathmandu

5 pieces of calculator@ Rs. 650 3250
3 sets of telephone @Rs. 1050 3150

6400

Total

109800

Sales Return Book

Sales return book is the first entry of all the goods returned by customers. It is the primary records of all the sales returns. The sales return book is prepared on the basis on the basis of credit note sent to the customer.
Example:
a. Returned by Suraj Furniture Center: 3 chairs@ Rs.1300
b. Returned by Maanik Furniture Center: 2 sofa sets@ Rs.6500 and 3 Tables @ Rs.1500

Sales Return Book

Date

Particulars

In. no

L. F

Details

Total

a.

Suraj Furniture Center

3 Chairs @ Rs. 1300

3900

b.

Maanik Furniture Center

2 sofa sets @ Rs. 6500

13000

3 tables @ Rs. 1500 4500 17500

Total

21, 400

Journal Proper

Journal proper is a subsidiary book that records only non- recurring transactions in chronological order. It records those transactions for which no separate subsidiary book has been provided. Credit purchase and sale of assets, bad debts, depreciation and goods withdrawn by the proprietor are some of the examples of transactions, which are recorded in the journal proper.

Invoice

An invoice is received from the supplier while buying goods and it is sent to the customer while selling goods. It is a statement, which is prepared and sent out by the seller along with the goods to buyer mentioning the details of the goods. It states the items of goods, quantity, unit price, total amount, and discount allowed, expenses incurred on behalf of the buyer and net payable amount. It represents the sale transaction. It serves as the basis for maintaining records in the purchases and sales book.

Discount

Discount is a reduction either in the list price of goods being purchased or in the amount of debt being paid. Discount can be classified into two types:

  • Trade discount
    It is a reduction in the list price of goods being purchased. It is offered by the seller so as to encourage the buyer to purchase goods in bulk. However, it is not recorded in any book. Therefore, the purchase of goods transaction is recorded with the net amount derived after subtracting trade discount out of the invoice price. The reduction of price of goods at the time of purchase including cash purchase out of the invoice price is treated as trade discount.

  • Cash discount
    It is a reduction in the amount of debt being paid. It is offered by the creditor to the debtor so as to motivate the debtor to make the payment promptly within a specified time. Cash discount allowed to the debtor is an expense and cash discount received from the creditor is an income. Therefore, cash discount is recorded in the books of account.



  • Purchase Book is the first entry of all goods purchased on credit. It is the primary record of all the credit purchases, which are either for reselling or further processing.
  • Journal proper is a subsidiary book that records only non- recurring transactions in chronological order.
  • Discount is a reduction either in the list price of goods being purchased or in the amount of debt being paid.
  • An invoice is received from the supplier while buying goods and it is sent to the customer while selling goods. 
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Very Short Questions

Solution:

Purchase Book

Date

Particulars

Invoice No.

LF

Amount (in Rs.)

Details

Total

2012/05/01

Palpa Furniture Works

20 chairs @ Rs.800 per unit

16,000

10 Coffee Tables @ Rs.2,000 per unit

20,000

36,000

2012/05/22

Vina Traders:

5 fancy tables @ Rs.5,000 per unit

25,000

5 dressing tables @ Rs.10,000 per set

50,000

75000

Less: Trade discount 10%

7,500

67,500

Total

1,03,500

Dr.

Purchase a/c

Cr.

Date

Particulars

JF

Amount (Rs.)

Date

Particulars

JF

Amount (Rs.)

2012/05/15

To cash a/c

90,000

2012/05/22

By balance c/d

2,03,500

To discount a/c

10,000

2012/05/22

To Sundries

1,03,500

2,03,500

2,03,500

2012/06/01

To balance b/d

2,03,500

Solution:

Purchase Return Book

Date

Particulars

Invoice No.

LF

Amount (in Rs.)

Details

Total

2015, Baishak 03

Sujan:

2 Tape recorders @ Rs.1,000 each

2,000

1 Radio @ Rs.500

500

2,500

2015, Baishak 05

Bishnu:

2 television sets @ Rs.5,000 each

10,000

Less: 10% trade discount

1,000

9,000

2015, Baishak 18

Narayan:

3 Telephone sets@ Rs.1,000 each

3,000

4 heater sets @ Rs.2,000 each

8,000

11,000

Total

22,500

Dr.

Purchase return a/c

Cr.

Date

Particulars

JF

Amount (Rs.)

Date

Particulars

JF

Amount (Rs.)

2015/01/30

By balance c/d

22,500

2015/01/30

By Sundries a/c

22,500

22,500

22,500

2015/02/01

By balance b/d

22,500

Solution:

Sales Book

Date

Particulars

Invoice No.

LF

Amount (in Rs.)

Details

Total

a)

Kamal and Brothers of Jhapa

10 Tables fans @ Rs.1,100 per unit

11,000

5 celing fans @ Rs.600 per unit

3,000

14,000

b)

Sachin and Brothers of Kathmandu

12 pressure cooker @ Rs.800 per unit

9,600

8 rice cookers @ Rs.1,000 per unit

8,000

17,600

Total

31,600

Dr.

Sales a/c

Cr.

Date

Particulars

JF

Amount (Rs.)

Date

Particulars

JF

Amount (Rs.)

By balance c/d

43,000

By Sundries a/c

31,600

BY cash a/c

12,000

43,000

43,000

By balance b/d

43,000

Sales Return Book

Date

Particulars

Invoice No.

LF

Amount (in Rs.)

Details

Total

May 2

Niraj & Sons

10 electric fans @ Rs.1,500 each

15,000

8 pressure cookers @ 2,000 each

16,000

31,000

Less: 10% trade discount

3,100

27,900

May 10

Neeraj & Sons

10 pcs of heater @ Rs.1,000

10,000

Total

37,900

Dr.

Sales return a/c

Cr.

Date

Particulars

JF

Amount (Rs.)

Date

Particulars

JF

Amount (Rs.)

May 30

To Sundries a/c

37,900

May 30

By balance c/d

37,900

37,900

37,900

June 01

To balance b/d

37,900

0%
  • How many types of subsidiary books are used in Nepal?

    2


    6


    5


    3


  • The source documents for entries made in the Return Outwards Journal are ______.

    copies of sales invoices


    purchase invoices


    credit notes issued by suppliers


    copies of credit notes issued to customers


  • Which one of them is not the type of subsidiary book?

    purchase return book
    journal book
    purchase book
    sales book
  • A cash book is the primary records of ______.

    all the receipts and payments made in cash and through a bank
    all the purchase returns
    all the credit sales
    all goods purchased on credit
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