What are books of original entry?
Books of original entry are where transactions are first entered into the system; from these books the entries are then transferred into the ledger account.
The main books of original entry are:
- Sales Day Book: It records the day to day sales invoices to customers and VAT amount.
- Sales Return Day Book: Also known as Returns Inward Day Book. This records any return made by the customer to the business which will result in a credit not being issued.
- Purchase Day Book: This records the day to day purchase invoices made by the company from their suppliers including VAT amounts.
- Purchase Return Day Book: Otherwise known as the Return Outwards Day Book. This records any returns sent back to the suppliers also resulting in a credit note.
- Cash Book: This is used to record all bank and cash payments and receipts and is also a main book of account within the ledger as well as a book of original entry.
- Petty Cash Book: This is used to record all bank and cash payments recorded using the petty cash voucher.
- Journals: This is used to record transactions that are not covered in the books of original entry. It is used to explain correction or unusual entries that do have documents to support them.
Posting in Sales Day Book
The total of the sales book is credited to sales account. Customers whose name appears in the sales day are debited with the amount appearing against their name. Double entry is thus completed.
Format of Sales Day Book
The following is the format of Sales Day Book.
| Date | Particulars | Invoice No. | L.F. | Amount |
Example
From the following transactions of a trader, prepare the Sales Day Book of M. Amina and post it into ledger.
1991
₦
Jan 5 sold goods to Ideal College 200
Jan 10 sold goods to Ahmad & Co. 100
Jan 20 credit sales to Karim Bakh 400
Jan 31 sold goods to Cheap Stores 100
Solution
Sale Day Book
| Date | Particulars | Invoice No. | L. F. | Amount |
| 1991 | ₦ | |||
| Jan 5 | Ideal College | 200 | ||
| Jan 10 | Ahmad & Co. | 100 | ||
| Jan 20 | Karim Bakh | 400 | ||
| Jan 31 | Cheap Stores | 100 | ||
| 800 |
Sales Account
| Date | Particulars | Amount | Date | Particulars | Amount |
| 1991 | ₦ | ||||
| Jan 31 | By sundries as per sales book | 800
|
Example on Sales Return Day Book Posting
The sales return book is debited to return inwards account or sales return account. The customers who have returned the goods are credited with the amount shown against their names.
Illustration
From the following transactions of a trader, prepare the sales return book and post it into ledger.
1991 ₦
Jan. 8 Goods returned by Parker & Co. 40
Jan. 20 Goods returned by Ideal Traders 52
Jan. 31 Allowance granted to John & Co. 100
Solution
Sales Return Book
| Date | Particulars | Amount |
| 1991 | ₦ | |
| Jan 8 | Parker & Co. | 40 |
| Jan 20 | Ideal Traders | 52 |
| Jan 31 | John & Co | 100 |
| 192 |
Sales Return Account
| Date | Particulars | Amount | Date | Particulars | Amount |
Example on Purchase Day Book
From the following transactions of a trader, prepare the purchase day book and post it into ledger
1991 ₦
Jan 5 Purchased goods from Rasool & Co. 2,400
Jan 15 Purchased goods from Igbal Bros 6,000
Jan 25 Purchased goods from More & Co. 1,500
Jan 30 Purchased goods from Magbool & Co. 3,000
Solution
Purchase Day Book
| Date | Particulars | Invoice No. | L. F. | Amount (₦) |
| 1991 | ||||
| Jan 5 | Rasool & Co. | 2,400 | ||
| Jan 15 | Igbal Bros | 6,000 | ||
| Jan 25 | More & Co. | 1,500 | ||
| Jan 30 | Magbool & Co. | 3,000 |
Balancing Cash Book
The cash book is balanced at the end of a given period by inserting the excess of the debit on the credit side as “by balance carried down” to make both sides agree. The balance is then shown on the debit side by “to balance brought down” to start the next period. As one cannot pay more than what he actually receives, the cash book recording cash only can never show a debit balance.
Format of a Cash Book
The following is the simple format of a cash book.
| Date | Particulars | L.F. | Amount | Date | Particulars | L.F. | Amount |
Example on the Petty Cash Book
1991 ₦
March 2 Paid for postage stamp 8
March 2 Paid for stationery 10
March 3 Paid for cartage 4
March 3 Paid for postage stamp 6
March 8 Paid for paper 1
March 12 Paid for cartage 6
March 18 Paid for trips to office 2
March 23 Paid for ink & nibs 4
March 25 Paid for Tiffin to office peons 6
March 26 Paid for train fare 5
March 28 Paid for bus fare 4
March 29 Envelopes and letter-heads 6
March 30 Printing address on above 4
March 31 Taxi fare to manager 10
Solution
| Amt | Date | Particulars | Total | Postage | Printing stationery | Cartage | Travelling exp. | Misc |
| ₦ | 1991 | |||||||
| 100 | Mar. 1 | To cash | ||||||
| 2 | By postage | 8 | 8 | |||||
| 2 | By stationery | 10 | 10 | |||||
| 3 | By cartage | 4 | ||||||
| 3 | By postage | 6 | 6 | |||||
| 8 | By paper | 1 | 1 | |||||
| 12 | By cartage | 6 | 6 | |||||
| 18 | By trips to office | 2 | 2 | |||||
| 23 | By ink & nibs | 4 | 4 | |||||
| 25 | By Tiffin to peon | 6 | 6 | |||||
| 26 | By Train fare | 5 | 5 | |||||
| 28 | By bus fare | 4 | 4 | |||||
| 29 | By envelopes | 6 | 6 | |||||
| 30 | By printing | 4 | 4 | |||||
| 31 | By taxi fare | 10 | 10 | |||||
| 31 | By balance c/d | 24 | ||||||
| 100 | 100 | 14 | 25 | 10 | 19 | 8 | ||
| April 1 | To balance b/d to cash |
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