Special Purpose Subsidiary Books Class 11 Notes

Recording all transactions in one single journal would make accounting very complex. Therefore, the Journal is further divided into special-purpose subsidiary books, which are as follows:

• Purchase Book
• Sales Book
• Purchase Return Book
• Sales Return Book
• Bills Receivable Book
• Bills Payable Book
• Journal Proper

Purchase Book

All credit purchases of goods are recorded in the purchase book. For example, if a firm dealing in cloth purchases cloth, it will be treated as a purchase of goods and will be recorded in the purchase book.

A purchase book is called ‘Invoice Book’ or ‘Purchase Day Book’. The following transactions are not recorded in the purchase book:

1. Cash Purchases: Cash purchases are not recorded in this book since these will be recorded in the cash book.
2. Purchase of Asset: The purchase of assets, such as machinery, furniture, typewriters, etc. are not recorded in the purchase book, instead these are recorded in the journal proper if purchased on credit or in the cash book if purchased for cash.

Recording of Transactions: The source documents based on which the transactions are recorded in the purchase book record invoices or bills received by the firm from the suppliers of the goods.

Format of Purchase Book

• Date: The date of the purchase of goods on credit is recorded in this column.
• Particulars: The name of the person or firm to whom the goods are purchased is written in this column.
• Invoice Number: The number of the invoice or bill based on which the transactions are recorded in the purchase book is mentioned in this column.
• Ledger Folio or L.F: The page number of the ledger where the transaction is posted is recorded in this column.
• Details: This column is used to write the individual amount of different items purchased from a particular supplier.
• Purchase: The net amount of purchase i.e., purchase less trade discount is written in this column.
• Input Central GST (CGST): This tax is paid on intra-state purchase of goods i.e., purchase of goods within the same date.
• Input State GST (SGST): This tax is also paid when purchasing goods within the same state.
• Input Integrated GST (IGST): This tax is paid on inter-state purchase of goods i.e., purchase of goods from outside the state.
• Total Amount: The total amount of each transaction is shown in this column and the amount of each transaction is posted to the credit of the supplier A/c in the ledger.

Difference between Purchase Book & Purchase Account

The purchase book is a part of the journal, whereas the purchase account is part of the ledger.

There is a difference in the format of the purchase book and purchaes account. The purchase book is not divided into debit and credit sides, whereas the purchase account is divided into debit and credit.

Purchase book records only credit purchases of goods, whereas credit, as well as cash purchases of goods, are posted in the purchase account.

Sales Book

All credit sales of goods are recorded in the sales book. The sales book is also called the Sales Day Book. Following are the transactions that are not recorded in the sales book:

1. Cash Sales: It does not record cash sales of goods, as the cash sales are recorded in the cash book.
2. Sale of Asset: Only the credit sale of goods is recorded in this book. Credit sale of an asset will be recorded in Journal Proper, whereas cash sale of the asset will be recorded in the cash book.

Recording of Transactions: Entries in the sales book are recorded based on the sales invoices issued by the firm to its customers at the time of sale.

Format of Sales Book

• Date: The date of the sale of goods on credit is recorded in this column.
• Particulars: In addition to the name of the customer, this column also contains the description of goods sold, their quantity, rate, gross amount, trade discount, etc.
• Invoice Number: Number of the bill or invoice in which transactions are recorded.
• Ledger Folio or L.F.: The page number of the ledger where the transaction is posted.
• Details: This column is used to write the individual items sold with less trade discount. It is also used to add the amount of Output CGST, Output SGST, and Output IGST.
• Sale: The net amount of sale i.e., sales less trade discount is written in this column.
• Output Central GST (CGST): A separate column is provided in the sales book to record output CGST.
• Output State GST (SGST): The sales book also provides a separate column to record output SGST.
• Output Integrated GST (IGST): A separate column is maintained to record output IGST.
• Total Amount: Total amount of each transaction is shown in this column and the amount of each transaction is posted to the debit of the customer’s A/c in the ledger.

Purchase Return Book or Purchase Return Journal

This book is used to record the return of such goods as were purchased on a credit basis. The book is also known as The Return Outward Book.

There may be various reasons for returning the goods to the suppliers:

1. When the goods delivered are not according to the sample.
2. When the goods are not according to the order or the quality of the goods supplied is inferior.
3. When the goods are defective or they have been damaged in transit.
4. When the price charged in the invoice is over the agreed price.
5. When the goods have not been delivered in time.

When the goods are returned, a debit note is prepared and sent to the supplier with the returned goods. It is called a debit note because the party’s account is debited with the amount written in this note.

Format of Purchase Return Book

• Date
• Particulars
• Debit Note No.
• L.F.
• Details
• Purchase Return
• Input CGST
• Input SGST
• Input IGST
• Total Amount

Sales Return Book or Sales Return Journal

This book is used to record the return of such goods as were sold to the customers on a credit basis. This book is also known as the Return Inwards Book.

When the goods are received back, a credit note is prepared in duplicate and the original copy of the same is sent to the party from whom the goods were received.

Format of Sales Return Book

• Date
• Particulars
• Credit Note No.
• L.F.
• Details
• Sales Returns
• Output CGST
• Output SGST
• Output IGST
• Total Amount

Provision and Reserves Class 11 Notes

Journal Proper

After the sub-division of the journal into various subsidiary books, the journal remains only a residuary book in which only those transactions are recorded which cannot be recorded in any other subsidiary book. In such a case, the journal is called Journal Proper.

The following types of transactions are recorded in Journal Proper:

Opening Entry

This entry is passed to bring the closing balances of various assets, liabilities, and capital appearing in the balance sheet of the previous accounting period, to the books of the current accounting period.

Closing Entries

At the end of the accounting period, a Trading and Profit and Loss Account has to be prepared to ascertain the net profit.

Transfer Entries

Transfer entries are passed for transferring an amount or the balance of one account to another such as transferring the balance of Drawings A/c to Capital A/c.

Adjustment Entries

At the time of preparation of final accounts, entries are needed to record certain unrecorded items such as closing stock, outstanding expenses, prepaid expenses, depreciation on fixed assets, interest on capital, etc.

Rectifying Entries

These entries are passed to rectify the errors while journalizing, posting, totaling, balancing, etc.

Miscellaneous Entries

In addition to the above, the following entries will also be passed in the journal proper:

1. Purchase of an asset on credit
2. Sale of an asset on credit
3. Writing off bad debts
4. Discount allowed and discount received
5. Bills receivables received
6. Bills payables issued
7. Endorsement of bill receivable to a creditor
8. Dishonor of bills receivables (not discounted with the bank)
9. Cancellation of bills payable
10. Goods taken by the proprietor for personal use
11. Goods are given away as charity or free sample
12. Abnormal loss of stock or other asset by fire, accident, theft, etc.

These are the special purpose subsidiary books class 11 notes. If you have any doubts about these notes, you can ask in the comments or telegram group.