Professor Vipin 2014
Unit 4
Subdivision of Journal
Definition
In each separate journal, one particular class of business transaction is recorded, that means that
purchase journal may be maintained to record credit purchases of goods, Sales journal may be
maintained to record credit sales of goods and cash book for recording cash transaction. Instead of
recording all transaction in one journal, they are recorded in separate journal know as subsidiary books.
Subsidiary books, it is nothing but a ledger, which can be maintained by big organization concerns.
There are 7 types of subsidiary books:
1. Cash Book: The cash book mean by “to record all cash transactions- whatever be their nature”.In Cash
book we record cash receipts and payments, Bank receipts and payments, contra entries and cash
discounts transactions.
2. Purchases Book: The Purchase book mean by “to record all transactions of credit purchase”.In
purchase book, we record credit purchases information. Cash purchase information record in cash book.
3.Sales Book: The sales book mean by “to record all transactions of credit sales”. In sales book, we
record credit sales information. Cash sales information record in cash book.
4. Purchases returns Book: The Purchase returns book mean by” to record all transactions of purchase
returns to suppliers”. It is also called returns outward book or purchases returns day book.
5. Sales returns Book: The sales returns book meant by “to record all transactions of sales returns from
customers”. Sales returns book is also called returns inwards book or sales returns day book.
6. Bills Receivable book: Bills receivable book mean by “to record of the bills received from debtors”.
When a bill is received from debtor, details of it are recorded in the bills receivable book.
7. Bills payables book: Bills payable book mean by “to record of bills accepted by us”. When a bill drawn
by our creditor is accepted particulars of the same are recorded in this book.
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Cash Book / Cash Journal
The cash book is meant for recording all cash transactions It can be any of the following types:
1.
2.
3.
4.
5.
6.
Simple cash book
Two column cash book
Three column cash book
Multi column cash book
Cash receipts book
Cash payments book
Simple Cash Book (Single Column)
Dr
Date
Particulars
L/F Amount
Date
Particulars
Cr
L/F Amount
Two Column Cash Book
The two column cash book has a cash column and discount column
Three Column Cash Book
Dr
Cr
Date Particulars L/F Discount Cash
Bank
Date
Particulars L/F
Discount Cash
Bank
Contra Entry
When there is a transaction that relates to both cash and bank, this will be written on one side of Bank
Column and on other side of Cash Column. Such transactions are known as ‘Contra entries’. In case cash
is withdrawn from bank for office use, it is entered on the credit side of bank column and also in the
debit side of cash column of the cash Book. In case cash is deposited in the bank, the amount is recorded
on the debit side of bank column and on the credit side of cash column of the cash book. The letter ‘C’ is
written in the LF column on both sides against these entries. These entries are not to be posted into
ledger.
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Example 1
Enter the following transactions in a 3 columnar cash book
Jan 1st Cash in hand Rs. 14,000, balance at bank Rs. 5000
Jan 3rd Cash sales Rs. 6000
Jan 5th Paid Rs. 7000 into bank
Jan 6th Received a cheque for Rs. 700 from Suraj
Jan 8th Paid into bank, Suraj’s cheque of Rs. 700
Jan 10th Paid to Anurag by cheque Rs. 980 in full settlement of his account of Rs. 1000
Jan 11th Withdrew from bank for office Rs. 4000
Jan 12th Cash sales Rs. 8000
Jan 13th Received a cheque from John for Rs. 10,000 and lodged it into bank for clearance
Jan 14th Paid commission to Ram by cheque for Rs. 500
Jan 15th John’s cheque dishonored
Jan 29th Drew a cheque for Rs. 800 for personal use
Jan 31st Paid salaries by cheque Rs. 1500 and by cash Rs. 500
Jan 31st Bank charges Rs. 20 and insurance premium of Rs. 520 as shown in bank pass book
Solution 1
Dr
L/F
1-Jan
To Balance b/d
3-Jan
To Sales
5-Jan
To Cash
6-Jan
To Suraj
8-Jan
To Cash
C
11-Jan
To Bank
C
12-Jan
To Sales
13-Jan
To John
Cash
14000
Bank
5000
6000
C
7000
700
Date
5Jan
8Jan
Particulars
L/F
Discount
Particulars
Discount
Date
Cr
By Bank
700
20
980
By Cash
700
By John
8000
By Drawing
10000
4000
By Commission
4000
500
10000
800
By Salaries
500
By Bank Charges
520
By Balance C/D
1-Feb
To balance b/d
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22700
24500
4380
1500
20
By Insurance Premium
32700
Bank
7000
By Bank
By Anurag
Cash
20
24500
4380
32700
22700
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Professor Vipin 2014
Example 2
Record the following transactions in various subsidiary books and post them into ledger.
June 1. Cash in hand Rs. 15700, cash in bank Rs. 25,000 and capital account Rs. 41,100
June 3. Bought goods for cash Rs. 4100
June 4. Purchased goods from Mahesh & Co for Rs. 5800 less 10% trade discount.
June 7. Sold goods to Bindia & Co for Rs. 8900 less 20% trade discount
June 9. Withdrew Rs. 500 from bank for private use.
June 12. Sold goods to Amjad for Rs. 6400.
June 15. Rs. 5000 paid to Mahesh & Co in full settlement of their account.
June 18. Goods worth Rs. 400 returned by Amjad
June 20. Received Rs. 4000 by Amjad
June 21. Purchased goods from Shiv & Co for Rs. 8700
June 23. Rs. 6000 paid to Shiv & Co by cheque, discount allowed Rs. 300
June 24. Purchased furniture for Rs. 800 from Surjeet furniture House on credit.
June 26. Paid to bank Rs. 2200
June 28. Amjad declared insolvent, a first and final dividend of 50p received from him
June 29. Goods worth Rs. 600 returned to Shiv & Co.
June 30. Interest on capital provided Rs. 411
June 30. Paid Rs. 500 for advertisement by cheque
June 30. Paid salaries to staff Rs. 1800
June 30. Cash sales Rs. 21800
June 30. Paid to bank Rs. 20000
June 30. Bought 100 shares in Hind Mills Ltd at Rs. 11 per share. Brokerage of Rs. 25 paid
June 30. Received Rs. 5900 from Bindia & Co. Discount allowed Rs. 100
Date
Particulars
24-Jun Furniture A/c
To Surjeet Furniture House A/C
(Being furniture purchased on credit)
28-Jun Bad Debts A/C
To Amjad A/C
(Being 50% written off as Amjad is insolvent
30-Jun Interest on Capital A/C
To Capital A/C
(Being interest on Capital provided)
30-Jun Drawings A/C
To Purchases A/C
(Being goods taken for personal use)
30-Jun Capital A/C
To Drawings A/C
L/F Debit Credit
800
800
1000
1000
411
411
400
400
900
900
(Being transfer of balance of drawings A/C
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Sales Book
Date
Particulars
7-Jun Bindia & Co : Goods sold
Less: 20% Trade
discount
12-Jun Amjad
30-Jun Sales A/C
L/F Rs.
Purchases Book
Date
Particulars
4-Jun Mahesh & CO: Goods Purchased
Less: 20% Trade discount
21-Jun Shiv & Co
30-Jun Purchase A/C
Sales Returns Book
Date
Particulars
28-Jun Amjad
30-Jun Sales Returns A/C
Purchase Returns Book
Date
Particulars
28-Jun Shiv & Co
30-Jun Purchase Returns A/C
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Rs.
8900
1780
7120
6400
13520
L/F Rs.
Rs.
5800
580
L/F
5220
8700
13920
Rs.
Rs.
400
400
L/F Rs.
Rs.
600
600
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Professor Vipin 2014
Dr
Cr
1-Jun
Particulars
L/F
To Balance b/d
Discount
Discount
Date
Cash
Bank
15700
25400
20-Jun
To Amjad
4000
26-Jun
To Cash
28-Jun
To Amjad
30-Jun
To Sales A/C
30-Jun
To Cash
30-Jun
To Bindia & Co
100
5900
1-Jul
To Balance b/d
100
48400
2200
Date
Particulars
3-Jun
By Purchases A/C
9-Jun
By Drawings A/C
L/F
Cash
Bank
4100
500
15-Jun
By Mahesh & Co
220
1000
23-Jun
By Shiv & Co
300
21800
26-Jun
By Bank
30-Jun
By Advertisement
30-Jun
By Salaries
30-Jun
By Bank
30-Jun
By Investment
1125
30-Jun
By Balance c/d
14175
40600
48400
47600
20000
47600
5000
6000
2200
500
1800
20000
520
Petty Cash Book
A petty cash book is one in which all petty or small payments made through petty cash fund are
recorded systematically. Petty cash book is maintained by the petty cashier. Petty cash book can be
maintained either in a simple or in analytical way.
There are two primary types of entries in the petty cash book, which are a debit to record cash received
by the petty cash clerk (usually in a single block of cash at infrequent intervals), and a large number of
credits to reflect cash withdrawals from the petty cash fund. These credits can be for such transactions
as payments for meals, flowers, office supplies, stamps, and so forth.
A somewhat more useful format is to record all debits and credits in a single column, with a running
cash balance in the column furthest to the right, as shown in the following example. This format is an
excellent way to monitor the current amount of petty cash remaining on hand.
Example 3
Jan 1. Cash received from chief cashier Rs. 200
Jan 3. Typing paper Rs. 8. Postage Rs. 4
Jan 6. Office cleaning Rs. 4
Jan 8. Postage Rs. 2. Office clearning Rs. 2
Jan 10. Cartage Rs. 2
Jan 15. Postage Rs. 6
Jan 18. Ink Rs. 3. Typing paper Rs. 10
Jan 20. Typewriter ribbon Rs. 10
Jan 22. Telephone charges Rs. 7
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Jan 24. Office cleaning Rs. 2
Jan 25. Nail polish Rs. 27
Jan 27. Telegrams Rs. 25
Jan 29. Typing paper Rs. 30
Reciept
Payment
To cash from Chief Cashier
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Total
1-Feb
58
Misc
To Balance b/d
4
Particulars
3-Jan
Typing paper, postage
6-Jan
Office Cleaning
8-Jan
Postage, Cleaning
12
2
4
4
2
4
10-Jan
Cartage
15-Jan
Postage
18-Jan
Ink, Typing Paper
13
13
20-Jan
Typewriter Ribbon
10
10
22-Jan
Telephone Charge
24-Jan
Cleaning
25-Jan
Nail Polish
27-Jan
Telegrams
29-Jan
Typing Paper
200
1-Feb
8
Cleaning
200
Cartage
To cash from Chief Cashier
Date
Post
Particulars
Stationery
1-Jan
Voucher
Cash Book Folio
Date
2
2
6
6
7
7
2
2
27
25
25
30
61
27
30
44
2
8
27
Balance c/d
142
58
142
200
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