BOOK KEEPING O LEVEL(FORM TWO) NOTES – BOOK OF PRIME ENTRY(1)

BOOK OF PRIME ENTRY

JOURNALS

Journal is a French word meaning “Daily Record”. It is used to record transactions initially before the businessman forgets the exact details to post into the respective ledger.

The journal is sometimes called the book of prime entry, subsidiary books, or books of original entry, where entries are made prior to their posting to the respective ledger.

TYPES OF JOURNAL

Types of books of prime entry are as follows:

• Purchases journal/Day book
• Purchases return journal
• Sales journal
• Sales return journal
• Cash book
• Journal proper

Types of ledger

There are three main types of ledger where entries/transactions are posted from the books of prime entry:

• Purchases ledger
• Sales ledger
• General ledger

PURCHASES JOURNAL

The purchases journal is the book used to record daily purchases on credit only before posting to the ledger.

When goods are purchased on credit, the seller sends an invoice to the buyer.

Invoice: A document issued by the seller containing all information concerning the goods purchased or sold.

The individual entries in the purchases day book are immediately posted to the credit of the suppliers’ or creditors’ accounts in the purchases ledger, while the total of the purchases journal is posted to the debit of the purchases account in the general ledger, usually on the last day of the month.

PURCHASES JOURNAL

EXAMPLE

Record the following business transactions in the purchases journal.

• 1^st July bought on credit from Ketena Ltd:
  • 20 bags of sugar each 15,000
  • 15 bags of wheat flour each 8,000
• 10^th July bought on credit from Salehe:
  • 20 dozen exercise books each 1,600
  • 2 cartons of duplicating paper 24,000
• 14^th July bought goods on credit from Jengua worth 27,000
• 25^th July bought on credit from Kiharusi:
  • 10 pairs of shoes each 12,000
  • 14 boxes of shoe polish 7,000

Solution

PURCHASES JOURNAL

Transferred to purchases A/C Dr. in the general ledger.

EXERCISE 1

Record the following business transactions in a purchases journal. Show the total credit purchases at the end of the month.

• 1^st April bought on credit from WAZO HILI LTD:
  • 50 bags of cement each 7,000
  • 25 sheets of asbestos each 4,600
• 11^th April bought from Aluminium African Ltd:
  • 250 coecoqetid icon sheet each 2,500
  • 160 icon beans each 1,800
• 20^th April bought from YEMEN ENTERPRISES goods worth 189,000
• 24^th April bought on credit from KANUTI goods worth 320,000
• 30^th April bought on credit from MNANDI:
  • 50 copies of civics books each 1,400
  • 20 dozen of writing pad each 150

EXERCISE 2

Enter the following transactions in MLA WATU purchases day book and post to the ledger.

• 1^st Nov bought from Shah Stores:
  • 5 dining tables with chair @ Tshs. 600
  • 5 side tables @ Tshs. 300
• 5^th Nov purchases from Mzigo store:
  • 100 pairs of kanga @ Tshs. 107
  • 50 pairs of Vitenge @ Tshs. 107
• 10^th Nov bought from Wajamaa traders:
  • 10 bags of white sugar @ Tshs 575
  • 25 bags of yellow beans @ Tshs 600
• 15^th Nov bought from Lipangila traders:
  • 30 beds @ Tshs 450
  • 40 spring mattresses @ Tshs. 500
• 20^th Nov bought from Kuleana traders:
  • 3 boxes of juice flavour @ Tshs. 640
  • 6 boxes of straw @ Tshs. 190
  • 40 boxes of glasses @ Tshs. 1600

Solution.QN2

MLAWATU’S PURCHASES DAY BOOK

Transferred to purchases A/C Dr. in the General ledger.

PURCHASES LEDGER

DR SHAH STORES A/C CR

DR MZIGO STORES A/C CR

DR WAJAMAA TRADERS A/C CR

DR KULEANA TRADERS A/C CR

DR BABAJE TRADERS A/C CR

EXERCISE 3

Enter the following business transactions in the purchases journal of Kasime then post to the ledger accounts.

• 7^th Sept bought from KITUNGUU:
  • 6 dozen of shoes each 2,100
  • 10 dozen of socks each 500
• 18^th Sept bought goods on credit from KANYAMA TRADERS worth 6,000
• 28^th Sept bought on credit from BABAJE TRADERS:
  • 10 dozen of mathematical set each 3,000
  • 36 mathematics books each 2,000

EXERCISE 4

Kabila enterprises made the following purchases during the month of January 2000.

• 1^st Jan bought from Kilombero:
  • 100 bags of sugar 50kg at Tshs. 8,000 each
  • 50 bags of sugar 25kg at Tshs. 4,000 each
• 5^th Jan bought from Matatu shop:
  • 100 boxes of cooking fat @ Tshs 650
  • 20 boxes of cooking fat @ Tshs 700
• 10^th Jan bought from Moshi traders:
  • 100 pairs of raincoat at 120 each
  • 60 pairs of rain boots at 430 each
• 15^th Jan bought from Mombasa Stores:
  • 99 bags of salt 100kg at 450 each
  • 25 bags of maize flour 10kg at 550 each
• 20^th Jan purchases from Vijana enterprises:
  • 69 bags of sulphate ammonium 50kg at 850 each
  • 102 bags of urea 10kg at 102 each
• 25^th Jan bought from Bahari beach Hotel:
  • 25 used record players at 1,500 each
  • 50 used televisions at 6,000 each

Enter the above transactions to Kabila purchases day book and open the respective ledgers as well as General ledger.

Solution.QN3

KASIME’S PURCHASES JOURNAL

Transferred to purchases a/c Dr. General ledger

PURCHASES LEDGER

DR KITUNGUU A/C CR

DR KINYAMA TRADERS A/C CR

DR BABAJE TRADERS A/C CR

SALES DAY BOOK

When a sale takes place on credit, the seller sends an invoice to the buyer. The invoice is made out in duplicate, and the seller retains a copy. This copy is the source document from which a sales journal is written up.