Books of Original Entry and Cash Books: notes

Day Books and Journals

• Sales day book: Records credit sales of goods only. Cash sales go in the cash book. Example: Credit sale to Tendai for $200 is entered here, then posted to his account.
• Purchases day book: Records credit purchases of goods for resale. Example: Buying stock on credit from Moyo for $150.
• Sales returns book: Records goods customers send back on credit. Example: Customer returns goods worth $40, so the sales returns book shows $40.
• Purchases returns book: Records goods we send back to suppliers. Example: Returning goods worth $30 to Moyo, so the purchases returns book shows $30.
• General journal: Records everything that is not in the other books, such as buying equipment on credit or correcting errors. Example: Buying a van on credit for $900 goes in the general journal, not the purchases day book.

Cash Book Columns

• Cash and bank columns: All money received goes on the debit side. All money paid out goes on the credit side. Example: Cash sales of $120 are debited to the cash column.
• Discount allowed: Discount we give to customers. It goes on the debit side of the discount column. Example: A customer owing $100 pays $95, so discount allowed is $5.
• Discount received: Discount our suppliers give us. It goes on the credit side of the discount column. Example: We owe a supplier $200 and pay $190, so discount received is $10.
• Contra entry: Money moved between cash and bank. It appears on both sides of the same book. Example: Depositing $300 cash into the bank gives a bank debit of $300 and a cash credit of $300.

Petty Cash Book and Imprest

• Petty cash book: Records small everyday payments such as stationery, transport, and tea.
• Imprest system: The petty cashier starts with a fixed amount, such as $100. Example: If $70 is spent, $30 remains. The cashier asks for $70 to restore the float to $100.
• Analysis columns: Each payment is also entered under an expense heading, so totals can be posted to the ledger.