×

Purchase Book and Purchase Return Book

Top
Download PDF
FAQ

Bookmark added to your notes.
View Notes
×

The book of original entry is called a subsidiary book or a day book. A subsidiary book is used to record transactions of a similar nature. There are six kinds of subsidiary books maintained by most organizations; Cash book, Purchase book, Purchase Returns book, Sales book, Sales return book, and Journal proper. In case an organization does not maintain subsidiary books, it maintains Journal for all the transactions. A Journal is a record of all entries irrespective of their nature and does not bifurcate the entries according to their nature.

Let’s understand the Purchase book and Purchase Return Book in detail.


Purchase Book

A purchase book or a purchase day book is a subsidiary book. It contains the record of all credit purchases made. The cash goods purchases are recorded in the cash book. A Purchase book holds the record for the purchase of goods only and not purchases of assets. Asset purchase entries are recorded in the Journal proper.

The entries recorded in the Purchase book are done on the basis of source documents like invoices or bills received from the suppliers of goods. The entries in the purchase book are done for the net amount of the invoice and do not include trade discounts and other details on the invoice.

The total of the Purchase book is entered monthly on the Debit side of the Purchases A/c but the in individual accounts of the suppliers it may be entered daily. When the volume of transactions in an organization is large, the entries for the purchase a/c in the ledger may be posted weekly or fortnightly.

Performa of the Purchase Book

Date

Invoice No.

Name of the Supplier

L.F

Amount


Purchase Return Book

When the goods purchased on credit are returned to the supplier, the entries for such transactions are recorded in the Purchase return book or the purchase returns day book. Goods purchased are sometimes returned by the buyer on account of a defect or low quality. A separate subsidiary book is maintained for these purchase returns since these returns are not deducted from the purchases in the Purchase book. The entry for a purchase return transaction is done for the net amount on the invoice.

A debit note in duplicate is prepared for every return of goods. The original one is sent to the supplier while the duplicate copy is kept by the organization for its own records. The Debit note includes the date, serial number, name of the supplier, details of goods returned, and the reason for the return of the goods. 

The supplier can also prepare a Credit note and send it to the customer when the goods are received from the customer.


Proforma of the Purchase Return Book

Date

Debit Note No.

Name of the Supplier

L.F

Amount


Solved Example 

Q. Record the following transactions in the books of M/s. X and Co. and in the Purchase Account

Date

Particulars

1st Dec

Purchased from ABC Ltd. (Invoice No. 100): 1000 pens @ ₹ 5 per piece.

10th Dec

Purchased from XYZ Ltd. (Invoice No. 150): 10000 pencils @ ₹ 3 per piece. Trade discount 20%

15th Dec

Purchased from Max Ltd.. (Invoice No. 250): 2000 erasers for @ ₹ 2 per piece. Trade discount 10%


Solution:

In the books of M/s. X and Co.


Purchase Book

Date 

Invoice No. 

Name of the Supplier

L.F

Amount (₹)

1st Dec

100

ABC Ltd.


5000



1000 pens @ ₹ 5 per piece



10th Dec

150

XYZ Ltd.


24,000



10000 pencils @ ₹ 3 per piece= 30000





Less: 20% T.D   =  6000



15th Dec

250

Max Ltd.





2000 erasers for @ ₹ 2 per piece = 4000


3600



Less: 10% T.D. =   400



31st Dec


Total


32,600


Purchase A/c 

Date

Particulars

Amount


Date

Particulars

Amount

31st Dec

Sundries as per Purchase Book

32,600





FAQ (Frequently Asked Questions)

Q1. What is the difference between a Purchase Book and a Purchase Account?

Ans. Difference between a Purchase Book and Purchase Account:

Purchase Book

Purchase Account

It is part of the journal

It is part of the ledger

It does not have a debit and credit column

Since it is part of the ledger, it has a debit and a credit column

Purchase Book balance is posted to the Purchase Account

The balance from the Purchase Account is posted to the Trading Account

Only credit purchases are recorded

All cash and credit purchases are entered into this account after journal entries are made for them