Page 96 - Book-keeping for Secondary Schools Student’s Book Form One

Book-Keeping for Secondary Schools

Posting from the purchases journal
The purchases journal records the purchases of goods bought on credit from suppliers.
These transactions lead to an increase in expenses (purchases) and an increase in
liabilities (trade payables). Like all the other special journals, posting entries from the
purchases journal is done in two stages as follows:

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Stage one: Posting to subsidiary ledger
Posting to a subsidiary ledger involves posting the entries to the individual accounts of
each supplier in the journal. The entries are recorded on the credit side of the respective
accounts (personal accounts of each supplier). This is because the transactions involved
increases liabilities (payables to each supplier).

Stage two: Posting to the general ledger
The general ledger posting involves the periodic (weekly or monthly) totals of the
journal. These are posted to the purchases account and the trade payables account
because they represent increases in expenses (purchases)and liabilities (payables),
respectively. The entries made are therefore:
Debit: purchases account

Credit: trade payables account

Posting from the purchases returns journal
The purchases returns journal records transactions related to goods returned to suppliers
that were purchased on credit. These transactions lead to a decrease in expenses
(purchases are decreased by purchases returns) and a decrease in liabilities (trade
payables). Like all the other special journals, posting entries from the purchases returns
journal is done in two stages as follows:

Stage one: Posting to a subsidiary ledger
Posting to a subsidiary ledger involves posting the entries to individual accounts
of each supplier in the journal. Entries are recorded on the debit side of respective
accounts (personal accounts of each supplier) since purchase returns decrease liabilities
(payables to each supplier).

Stage two: Posting to the general ledger
The general ledger posting involves, the periodic (weekly or monthly) totals of the
journal. These are posted to the purchases returns account and the trade payables account
because they represent the decrease in expenses (purchases are decreased by purchases
return) and liabilities (payables), respectively. The entries made are therefore:

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Student’s Book Form One

Book Keeping Form 1 New 2024 FINAL.indd 88 18/10/2024 10:14