On March 1st − Mr. T opened a current account with ABC Bank with balance of Rs.100000/-On March 4th − T paid to Mr. N of Rs.5000/- by cheque.On March 9th − T received an amount of Rs. 10000/- from Mr. U by cheque and deposited it in the bank.On March 11th − Withdraw amount of Rs.3500/- for office use.On March 12th − Paid rent of Rs.8000/- by cheque.On March 17th − Bank charges of Rs.350/- is debited.On March 23rd − Paid Rs.2500/- to Mr. G by cheque.SolutionThe transactions entered in cash book and pass book respectively are as follows ... Read More

The major differences between a return inward and a return outward are as follows −Return inwardReturn inward is defined as the seller returning the goods back due to various reasons (defective, incorrect goods etc.)Return inward transactions starts, when the seller receives sold goods back.It occurs next to return outwards.The journal entry for return inward is as follows −Return inwards A/c      To customers AcDebit      CreditIt is recorded in seller books of accounts.Impact − Reduces seller sales and creates liability.In financial statements, it is disclosed in reduction from sales in the seller trading account.The consequences are goods resale ... Read More

The major differences between a purchase book and a purchase account are as follows −Purchase bookPurchase book is the book, which records all the credit transactions related to the goods purchased.Primary book of accounts.The purpose of a purchase book is to maintain all the credit transactions related to the goods purchased.Records only transactions related to credit business.Purchase book balance is not transferred to business financial statements.No separate credit column.Not dependent on other books.The format of purchase book is as follows −DateParticularsInvoice numberLedger folioDetailsAmountPurchase accountPurchase account is the ledger account that records all the credit and cash transactions related to business.Secondary ... Read More

Refer to the transactions given below and prepare a return outward book.On June 2 − Received note worth of Rs.800/- from V.On June 9 − Received note worth of Rs. 350/- from S.On June 15 − Received note worth of Rs. 600/- from M.On June 20 − Received note worth of Rs. 1200/- from N.SolutionThe return outward book for the above mentioned data is as follows −Return outward bookDateName of customerDebit noteFolioAmount02/06/2005V80009/06/2005S35015/06/2005M60020/06/2005N1200total2950For V account, the return outward book is as follows −DateParticularsAmountDateParticularsAmount02/06/2005Return outwards800For S account, the return outward book is as follows −DateParticularsAmountDateParticularsAmount09/06/2005Return outwards350For M account, the return outward book ... Read More

This book records the goods returned to suppliers. It is also called a purchase return day/ outward book. Goods return affects the companies' total purchases or accounts payable.Return outwards reduces business payables for suppliers and business expenses.Journal entryThe journal entry for a return outward book is as follows −Supplier's A/cDebitTo Return outwards A/cCreditHow it affects businessReduces accounts payables. Both sale return and purchase return are reversed and purchase or sale is nullified. These deductions are shown in the trading account. To these entries a separate book called "purchase returns book" is maintained.The return outward process is explained below with the ... Read More

Let us consider two examples to learn how to prepare a return inwards book.Example 1Refer the transactions given below and prepare return inwards book.On December 4 − X return goods worth of Rs.1000/- on which trader allowed a discount of 5% (credit note # 233).On December 10 − Y allowed a reduction of Rs.1500/- (invoice issued earlier) (credit note #234)On December 12 − Z return goods worth of Rs.1175/- (credit note # 235).On December 20 − D was issued an invoice of Rs.2300/-, trader allowed a discount of 20%, after he pointed out a defect in goods for the same invoice (credit ... Read More

Goods returned from customers are recorded in return inwards book.Return inwards reduces the business total accounts receivables. For business, return inwards decrease the revenue and for the customer, it decreases the receivables for business.Journal entryThe journal entry for a return inward book is as follows −Return inwards A/c     To customers AcDebit     CreditThe reasons for inward returns are as follows −Incorrect goods.Not the required quantity.Defective goods.Defects arose in the warranty period.Expired goods.AdvantagesThe advantages for the return inward book are as follows −Reason for return is known (like quantity, quality, value etc.)Obtain total amount of sale return.Reduces clerical work.Detects errors ... Read More

The transactions made by a FVY & co are as follows −On 3rd March − Goods sold to Ramkhi for 850/-On 12th march − 15 units sold to Yusuf for 50/- per unit.On 16th march − 40 units are sold to Vinod for 1600/- (includes 8% cash discount)On 20th march − Irfan bought goods worth 750/- on credit.SolutionFVY & co sold goods toOn march 3rd 2008 − Goods sold to ramkhi worth of Rs.850/-On march 12th 2008 − Goods sold to yusuf worth of Rs.750/-Worth = 15*70 = Rs.750/-On march 20th 2008 − Goods sold to Irfan worth of Rs.750/-The sales ... Read More

It is a manual ledger document, which contains information of sales made by a person on a business day. It is also called a sales register.Management analyses the effective amount after reconciliation every month. Sales day book is a subsidiary book, which maintains the overall sales and updates the sales every month end.It records all non-cash transactions related to sales. If a company sells any asset or investment on credit, these transactions are not recorded in the sales book, but those are recorded in a proper journal.Sales day book is also called a sales book/ sales journal/ sold book etc. ... Read More

A company purchases for the month of April 2012 as follows, On 6th April − Bought 25 computers from Com co. Each computer cost Rs.25000/- with 8% trade discount.On 12th April − Bought 150 phones from PHO co. Each phone cost Rs.950/- on credit.On 17th April − Bought 400 televisions from TV co. Each television cost 23580/- at a 4% cash discount.On 20th April − Purchased 150 radios from Ra co. Each cost them 320/- on credit.SolutionThe purchase day book is prepared for the above mentioned data.Amount due for Com co.Step 1 − On April 6th 25 computers were purchased ... Read More