[Commerce Class Notes] on Purchase Day Book Pdf for Exam

In the scope of accounting, accounts of primary entry and accounts of secondary entry are the two types of accounts. Among the books of primary entry, we have some specialized books, and we name these as subsidiary books. Among these subsidiary books, a very important kind is the purchase journal or the purchase day book. There are several types of purchase day books namely purchase journal, purchase day book, the book of the invoice, bought book, etc. It is an original entry book. This article will look into the definition, the format of purchase day book, advantages of purchase day book, solved examples, etc. 

 

Meaning of Purchase Day Book 

The purchase day book is a subsidiary book that records those credit purchases of a firm, which the firm shall resell. Therefore, no cash transactions are a part of a purchase journal. Such trades are a part of the cash book. Any transaction which the business doesn’t mean to resell is not made a part of the purchase book. 

 

For instance, a piece of machinery purchased on credit will not find a place in the purchase book but rather in a journal. When the accountant records all the entries properly, he/she calculates the total at the end of a week or month. This value shows the total amount of credit transactions for that specific period. This amount of money gets debited from the purchase account of the firm, and the credit goes to the accounts of the sellers individually.  

 

Format of Purchase Day Book

The format of the purchase day book is as follows: 

 

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As you can see, the format of the purchase book consists of five columns and is a tad bit different from an ordinary journal. The foremost column is the one concerning the date of purchase. The next column is the one for the particulars of the purchase, which in this case is the name of the supplier. One can also put in other details like the number of goods bought or the price of the goods, etc. The third column reads L.F., which refers to ‘ledger folio’ and the consecutive one is for the invoice number. These details are solely for reference information, as in the method of manual accounting, cross-referencing is an important element. The last column states the total amount that is due to the supplier for a particular transaction. 

 

Advantages of Purchase Day Book 

The following are a list of advantages of purchase daybook:

• All the transactions concerning the goods bought on credit find a single place for the purpose of referencing, thus simplifying the process.

• Important information regarding purchases doesn’t get lost and are together in one place.

• We don’t need a separate narration or account titles for a purchase day book entry.

• It facilitates the division of labour among the workers of the organization.

Now that the definition, format and importance of a purchase day book are clear, let us see a solved question on purchase day book followed by some frequently asked questions. 

 

Solved Examples 

1. PQR Ltd. runs a grocery store. The following is their list of purchases for November 2020. Draft a purchase daybook for these transactions. 

• 20Kg potatoes bought from XYZ farms at Rs. 40 per kilo and a 5% trade discount 

• 50Kg flour bought from EFG Co. at Rs.200 on credit 

• 60 bags of rice bought from DEF Ltd. at Rs.600 each and a 10% cash discount 

• 90Kg sugar bought from IJK Co. at Rs. 60 per kilo on credit 

Answer: 

Purchase Day Book

 

We do not consider the third transaction as the exchange was in cash and therefore, it will not be a part of a purchase day book.

Advantages

While working on a purchase day book, it provided some advantages over other types of record keeping which can be enumerated as follows:

• All entries of purchases are kept as a record in one place, therefore, it is easy to refer to and browse through these entries to look up for any information.

• All the important information regarding the transactions such as the number of items purchased or the amount of a product traded