Chap 5 - Books of Prime Entry and Subsidiary Ledgers

Books of Prime Entry:
Journals and Ledgers

Lesson outcome
At the end of this lesson, students should be able to:
1. Explain the stages in accounting
2. Identify the different types of journals and ledgers
3. Record the source document to journals and posting to
ledgers
4. Prepare the Trial Balance
2
ACCOUNTING CYCLE
1. SOURCE
DOCUMENT JOURNALIZE
5. FINANCIAL
STATEMENTS
2. BOOK OF PRIME
ENTRY/JOURNALS
PREPARE
4. TRIAL POST
BALANCE 3.
LEDGERS
EXTRACT
BALANCES
1. SOURCE OF DOCUMENTS
 Source of documents are the evidence that identify and
describe economic events and transactions that have taken
place in a business.
SOURCE DOCUMENTS PURPOSE
Sales invoice A document issued by the

supplier/seller of trading goods,
indicating credit terms of the transaction
such as date, quantities, prices,
customer’s name etc.
Purchases invoice An invoice received by the buyer of

trading goods, which in fact is the
seller’s sales invoice.
SOURCE DOCUMENTS PURPOSE
Credit Note (Return Inwards) A document issued by the seller, upon

receipt of goods returned by a dissatisfied
customer, to notify the customer of a
reduction in the amount owed by the
customer.
Debit note (Return Outwards) A document issued by the business (as a

customer), upon return of goods to the
supplier, to notify the supplier of a
reduction in the amount owing to the
supplier.
Receipts A document issued by the seller as

acknowledgement of cash received.
Cheques counterfoil/butts It shows details of payments made.

Sales Invoice
Source Document
LIA SARI BOUTIQUE
No 3,Lorong3, Tmn Sri Wang Fasa 1, 02600 Arau
Tel: 04-9882316
Email: [email protected]
Customer
INVOICE
To: Kelab Kebudayaan Invoice No: SL 1/2010
UiTM Pulau Pinang Date: 20/4/2010
Terms: 5/15, net 30
Quantity Descriptions Unit Price (RM) Total (RM)
25 Scarf 25 625
10 Scarf pins 15 150
Jumlah 775
Received by: Abu Johan LIA SARI Norita
6
Source Document Purchases Invoice
Supplier
AIDA Fashion Wear
No 181, Jalan Kampong Jawa Bharu, 10150 Pulau Pinang
Tel/Faks: 04-39808764/0196699906
INVOIS
Kepada: Lia Sari Boutique No: A 201/2010
No 3, Lorong 3 Tarikh: 4/4/2010
Taman Sri Wang Fasa 1, 02600 Arau Terma: 10/15, net 30
Bilangan Perkara Harga sepasang

RM Jumlah (RM)
25 Baju Kebaya 58 1,450
10 Baju Melayu 55 550
Jumlah 2,000
Norita Zuraida
Tandatangan Penerima Tandatangan Pengurus
7
PAYMENT VOUCHER
Source Document
LIA SARI BOUTIQUE
Tel: 04-9882316
PAYMENT VOUCHER
Voucher No: PV001
Pay To: AIDA fashion Wear
Date: 14/4/2010
PARTICULARS AMOUNT
Being settlement of invoice no A201/2010
Cheque no: 362511
Ringgit: One Thousand seven hundred and ninety only 1,790.00
Prepared by Authorised by
Naqiuddin Najmi
8
CHEQUE
Source Document
May Bank Tarikh: 14/4/2010
Cawangan Kangar Date:
BAYAR _______AIDA Fashion Wear_______________________________

PAY
RINGGIT _Seribu tujuh ratus dan sembilan puluh sahaja_____RM 1,790.00
MALAYSIA __________________________________________
Najmi
Lia Sari
362511 157081 312711
9
Source Document Credit Note
Return Inwards
LIA SARI BOUTIQUE

Tel: 04-9882316
CREDIT NOTE
To: Kelab Kebudayaan UiTM Pulau Pinang Credit Note No: CN001
Date: 23/4/2010

5 Scarf 25 125
Jumlah 125
Received by: Abu Johan LIASARI Norita
1
0
Source Document DEBIT NOTE
Return Outwards
LIA SARI BOUTIQUE

No 3, Lorong 3, Taman Sri Wang Fasa 1, 02600 Arau
Tel: 04-9882316
DEBIT NOTE
To: AIDA Fashion Wear Debit Note No: DN001
Date: 8/4/2010

2 Baju Kebaya 55 110
Jumlah 110
Received by: Abu Johan LIASARI
Norita
1
1
2. JOURNALS
 Also known as
 books of original entry,
 books of prime entry,
 subsidiary books and
 day books
 Advantages
 provides a chronological record of the business transactions
 instructs the bookkeeper as to which accounts to be debited
and which to be credited
 provides a complete picture of each business transactions
 helps locate errors as journal is the first book entry
1
2
Types of Journals
1. Sales Journal
2. Purchase Journal
3. Return Inward Journal (Sales return journal)
4. Return Outwards Journal (Purchase return journal)
5. Cash Receipt Journal
6. Cash Payment Journal
7. General Journal
13
Journals Relating to Purchases and Sales
Sales journal - Records credit sales of goods
Purchases journal - Records credit purchases of

goods
Returns inwards journal (sales return) - Records

returns/allowances in respect of goods sold
Returns outward journal (purchase return) - Records

returns or allowances in respect of goods purchased
1
4
Cash Journals
Cash payment journal

• Records cash and/or cheque
payments (cash disbursements
journal)
Cash receipts journal
• Records cash and/or cheque received.
1
5
General Journal
Opening and closing
journal entries
All other
Purchase and sales
transactions not
of non-current
recorded in any
assets on credits
other journal
Adjusting entries
Correction of
and reversing
errors done at the
entries done at the
end of an
end of an
accounting period
accounting period
1
6
IDENTIFY TYPES OF JOURNAL FOR EACH TRANSACTIONS
MAY 2 Purchased 10 pairs of shoes at a price of RM 1500 from Aminah
Tradings on credit
6 Sally, the customer of Bakar Enterprise purchased shoes of RM1,200.

She paid by cheque.
8 Returned back a pair of damage shoes to Aminah tradings

9 Paid amount owing to Aminah Trading by cheque
10 Sally returned back two pairs of shoes wrongly ordered by her
15 Purchased a new computer for business amounting to RM 4,000 by
credit from InfoTEch
19 Bought inventories of shoes amounting to RM 5,000 on credit from Abu

Trading
28 Bakar, the owner of Bakar Enterprise, took RM 1,500 cash from the
business for her personal use
30 Bakar injected capital of RM 3,000 cash into the business

31 All the cash in hand are banked in into the bank account
2015 Transactions
DEC 2 The owner brought cash into the business amounted to RM10,000.
3 Received an invoice for goods purchased worth RM5,000 from AA Enterprise.
4 Issued an invoice to a customer named Jihan worth RM1,500.

5 Purchased an office equipment by cash amounted to RM5,000.
6 Return goods to AA Enterprise worth RM200.
7 Purchased goods on credit worth RM3,000 from BB Trading.
8 Cash sales worth RM350.
9 The owner took RM1,800 goods for personal use.
10 Paid the remaining debt owed to AA Enterprise by cheque.
11 Sold goods by cash to AC Bhd worth RM1,000.
12 Received cheque for sales worth RM650.
13 Received a debit note RM100 from Jihan because of damaged goods.
14 Paid rental RM300 by cash.
15 The owner brought his own motor vehicle into the business worth RM3,000.
16 The business bought a set of computer worth RM5,000 on credit.

17 The owner paid the business’ utility bills using his own money amounting RM500.
18 Received dividends from Unit trust amounting RM400 by cheque.

19 Deposit RM4,000 cash into the bank.
20 Owner took RM500 cash from the business to pay his son’s school fees.
21 Paid salaries by cheque to his workers amounting RM2,000.
3. LEDGERS
Sales ledger: Purchases
Records of ledger: Records
individual of individual
debtors or creditors or
accounts accounts
receivable payable
General ledger: Cash book:

Records of Records of
accounts not receipts and
found in the payments
above ledgers involving cash
and cheques
1
9
Cash Book
 Cash books can replace the roles of the cash receipts
journal and the cash payment journal as the books of
prime entry; at the same time acting as the cash and
bank ledger accounts.
 It is used to record cash transactions
2
0
EXERCISE:
TEXT BOOK PAGE 220-233

Chap 5 - Books of Prime Entry and Subsidiary Ledgers

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Books of Prime Entry:

Journals and Ledgers

SOURCE DOCUMENTS PURPOSE

Sales invoice A document issued by the

Purchases invoice An invoice received by the buyer of

Credit Note (Return Inwards) A document issued by the seller, upon

Debit note (Return Outwards) A document issued by the business (as a

Receipts A document issued by the seller as

Cheques counterfoil/butts It shows details of payments made.

Bilangan Perkara Harga sepasang

BAYAR _______AIDA Fashion Wear_______________________________

LIA SARI BOUTIQUE

Quantity Descriptions Unit Price (RM) Total (RM)

LIA SARI BOUTIQUE

Quantity Descriptions Unit Price (RM) Total (RM)

Sales journal - Records credit sales of goods

Purchases journal - Records credit purchases of

Returns inwards journal (sales return) - Records

Returns outward journal (purchase return) - Records

Cash payment journal

6 Sally, the customer of Bakar Enterprise purchased shoes of RM1,200.

8 Returned back a pair of damage shoes to Aminah tradings

19 Bought inventories of shoes amounting to RM 5,000 on credit from Abu

30 Bakar injected capital of RM 3,000 cash into the business

4 Issued an invoice to a customer named Jihan worth RM1,500.

16 The business bought a set of computer worth RM5,000 on credit.

18 Received dividends from Unit trust amounting RM400 by cheque.

General ledger: Cash book:

 It is used to record cash transactions

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BAYAR _AIDA Fashion Wear_________________________