Purchases Invoice
This is a document received from suppliers showing details of goods purchased from them. It is evidence that goods has been purchased on credit. A purchase invoice may be prepared using the following format.
National Textiles Co Ltd Royal Road, Phoenix Tel : 5999 8888 | Name, Address and contact details of Supplier | ||||
Purchase Invoice No: 2020 101 | Invoice Number | ||||
ABC Textiles Co Ltd Royal Road , Camp de Masque Tel : 5999 9999 | Name, Address and contact details of trader (Buyer) | ||||
5th April 2020 | Date of transaction | ||||
Qty | Description | Unit Price | Total | Details of goods purchased from supplier | |
40 | T-Shirts | 150 | 6 000 | ||
20 | Jeans | 250 | 5 000 | ||
15 | Hoodies | 300 | 4 500 | ||
15 500 | |||||
Less 10% Trade Discount | 1 550 | ||||
Purchases Day Book | 13 950 | Amount transferred | |||
Terms and conditions : 10% Cash Discount if payment made within 30 days | |||||
Purchases Day book
A purchases day book is used to record credit purchases only. It is prepared from purchase invoices received from suppliers. It is also known as Purchases Journal or Purchases Book. It may be prepared using the following format.
Purchases Day Book | |||
Date | Details | Invoice No | Amount ($) |
Apr 5 | National Textiles Co Ltd | 2020 101 | 13 950 |
9 | XYZ Clothes Ltd | 3455 203 | 5 500 |
14 | Cool Textiles Ltd | 1569 008 | 8 500 |
Transfer to Purchases Account | 27 950 | ||
The total of the Purchases day book is posted to the debit side of the purchases account in the general ledger. Individual entries are then credited to suppliers account in the purchases ledger. (See Ledger entries below)
Credit Note received
If goods purchased are found to be damaged, they may be returned to suppliers. A credit note is received from suppliers showing full details of goods returned to them. It is evidence that goods has been returned to suppliers.
Purchases return day book
A purchase return day book is used to record goods returned to credit suppliers only. It is prepared from credit note received from suppliers. It is also known as Purchases return Journal /Return outwards day book and return outwards journal. It may be prepared using the following format.
Purchases Return Day Book | |||
Date | Details | Credit Note No | Amount ($) |
Apr 8 | National Textiles Co Ltd | 2020 991 | 900 |
13 | XYZ Clothes Ltd | 3455 883 | 500 |
20 | Cool Textiles Ltd | 1569 778 | 700 |
Transfer to Purchases Return Account | 2 100 | ||
At the end of the month, the total of the Purchases return journal will be credited to the purchases return account in the general ledger. Individual entries will be debited to respective supplier’s account in the purchases ledger.
The double entries from the purchases journal and purchases return journal are as follows:
General Ledger | |||||
DR | Purchases Account | CR | |||
Apr 30 | Purchases Day Book | 27 950 | |||
Purchases return Account | |||||
Apr 30 | Purchases return journal | 2 100 | |||
Purchases Ledger | |||||
DR | National Textiles Co Ltd Account | CR | |||
Apr 8 | Purchases return | 900 | Apr 5 | Purchases | 13 950 |
XYZ Clothes Ltd Account | |||||
Apr 13 | Purchases return | 500 | Apr 9 | Purchases | 5 500 |
Cool Textiles Ltd Account | |||||
Apr 20 | Purchases return | 700 | Apr 14 | Purchases | 8 500 |
General Journal
A general journal is used to record all transactions that cannot be recorded in other books of prime entry. Each records made in the general journal is accompanied by a narration clearly explaining the reasons for doing the entries. A narration is used so as not rely on the memory of the accountant to explain the entries made. A general journal is mostly used to
1. record purchase of non current assets on credit
2. to write off bad debts
3. to record depreciation
4. to correct errors
5. to calculate capital
