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Business Documents and

Books of Original Entry

Are the books in which we first record transactions, such as the sales
on credit, purchases on credit, etc.
We have separate book for each kind of transactions. Thus, the nature
of the transaction affects which book it is entered into.
The commonly used books of original entry are:
a)Sales journal for credit sales
b)Purchase journal- for credit purchases
c)Return inwards journal for return inwards
d)Return outwards journal for return outwards
e)General journal- for other items.
f)Cash book for receipts and payments of cash and cheques

All business transactions

Classify-put same types of transactions together

Credit
sales

Enter in
Sales
journal

Credit
purchases

Enter in
Purchases
journal

Return
inwards

Enter in
Return
Inwards
journal

Return
outwards

Enter in
return
outwards
journal

Enter in double entry accounts in the various ledger


Sales ledger
Purchases ledger
General ledger

Cash
receipts &
payments

Enter in
Cash
book

Other
types

Enter in
general
journal

The sales of many businesses will consist of credit sales.


For each credit sale, the selling business will give or send a
document to the buyer showing full details of the goods
sold and the prices of goods. This document is an
invoice.
It is known to the buyer as a purchase invoice and to the
seller as a sales invoice.
The seller will keep one or more copies of each sales
invoice for his or her own use.

From the copy of the sales invoice, the seller enters up the
transaction in the sales journal.
Example:
Jan
1
credit sales to Haron
RM310
3
credit sales to Farrah
RM285
6
credit sales to Malik
RM38

SALES JOURNAL
Dates

Details

Amount(RM
)

Jan

Haron

310

Farrah

285

Malik

38

31

Transferred to sales A/C 633

Sales Ledger

General Ledger
Haron

Jan 1 sales

RM310

Sales
Jan 31 credit sales for the

the month

Farrah
Jan 3 sales

RM285

Malik
Jan 3 sales

RM38

633

From the purchases invoices for goods bought on credit,


the purchaser enters the details in the purchase journal.
Example:
Jamal has the following credit purchases for the month of Jan
2008:

Jan

1
3
15

From Danny: 4 DVDs at RM60 each, 3 mini hi-fi units at


RM240 each. Less 25% trade discount.
From Fatin: 2 washing machines at RM280 each, 5 vacuum
cleaners at RM80 each.Less 20% trade discount.
From Bob: 1 hi-fi unit at RM600, 2 washing machines at
RM320 each.Less 25 % trade discount

working:
Danny:

4 X RM60

= 240

3 X RM240

= 720
960

Less: trade discount (25% x960)

(240)
720

Fatin:

2 X RM280

= 560

5 X RM80

= 400
960

Less: trade discount(20% x960)

(192)
768

Bob:

1 x RM600

= 600

2 x RM320

= 640
1240

Less: trade discount(25% x1240)

(310)
930

Dates

Details

Amount(RM)

Jan 1

Danny

720

Fatin

768

15

Bob

930

Transferred to purchases a/c

2418

31

Purchase Ledger

General Ledger

Danny
Jan 1 Purchases 720

Purchases
Jan 31 credit purchases
for the month

fatin
Jan 3 purchases 768

Bob
Jan 15 purchase 930

2,418

You know that businesses allow customers to return goods


theyve bought.
When seller agrees to take back goods and refund the amount
paid, a document known as a credit note will be sent to the
customers, showing the amount of the allowance given by the
seller.

June 1
10
20
21

credit sales to Dody RM200; Remy RM150


Goods returned to us by Dody RM20; Remy RM30
credit sales to Umar RM1,000
Goods returned to us by Umar RM150

sales Journal

Date

Details

Amount(RM)

June 1

Dody
Remy

200
150

20 Umar

1,000

30 Transferred to sales a/c

1,350

dates

Details

Amount(RM)

June 10

Dody
Remy

20
30

21

Umar

150

30

Transferred to return
inwards a/c

200

Sales ledger

general ledger
Dody

June 1

sales

sales

200 June 10 return inwards

20

Jun 30 total credit sales


for the month 1350

Remy
June 1

sales

150

Return inwards

June 10 return inwards 30

June 30 total return inwards


for the month 200

Umar
June 20 sales

1000 june 21 return inwards

150

If the supplier agrees, goods bought previously may be


returned.
When this happens a debit note is sent by the customer to
the supplier giving details of the goods and the reason for
their return.

May 1
4
7
10
18

Credit purchase from Farouk RM300


Credit purchase from the following:Amy RM 200; Black RM350
Goods returned by us to the following: farouk RM60; Black RM30
Credit purchase from Benjy RM250
Goods returned by us to Benjy RM25

Purchase Journal

date

Details

Amount(RM
)

May 1

Farouk

300

Amy

200
350

Black
10

Benjy

250

31

Transferred to purchases a/c

1,100

Dates

Details

Amount(RM)

May 7

Farouk
Black

60
30

18

Benjy

25

31

Transferred to return outwards a/c

115

Purchase ledger

general Ledger
farouk

May 7 return outwards 60

Purchases

May 1 purchases

300

may 31 credit purchase


for the month

Amy
May 4 purchases

1,100

Return outwards
200

may 31 return outwards for the


month

Black
May 7 return outwards

30

May 4 purchases

350

Benjy
May 18 return outwards

25

May 10 purchases

250

115


a)
b)

c)
d)

Some of the main uses of the journal are listed below:


The purchase and sale of fixed assets on credit
Opening entries. These are the entries needed to open new
set of books
Writing off bad debts
The correction of errors in the ledger account

The layout of the general journal is:


Dat
e

Details

Debit

The name of the a/c to be debited

xx

The name of the a/c to be debited

Credit

xx

Jan 1

Assets: Premises RM34,000; Van RM5125; Inventory RM6390


Liabilities: Account payable RM675

Bought another van on credit from Abe Motors RM5,000

Bought machinery for RM2000 on credit from Lex Company

10

A debt of RM100 owing from Kelly was written off as bad debt.

dates

details

debit

Jan 1

premises
Van
Inventory
Account payable
Capital

34,000
5125
6390
675
44840
45,515

Jan 2
Jan 6
Jan 10

Credit

Van
Abe Motors

5000

Machinery
Lex company

2000

Bad debt
Kelly

100

45,515
5000
2000
100