Why Subsidiary Books?
For a small business, every transaction can go into one journal. But once you're processing 50+ transactions a day, that single journal becomes unmanageable. So the journal is split into specialised subsidiary books (also called special journals):
| Book | Records |
|---|---|
| Cash Book | All cash and bank receipts and payments |
| Purchase Book | All credit purchases of goods |
| Sales Book | All credit sales of goods |
| Purchase Returns Book (Returns Outward) | Goods returned to suppliers |
| Sales Returns Book (Returns Inward) | Goods returned by customers |
| Bills Receivable Book | Bills received from debtors |
| Bills Payable Book | Bills accepted in favour of creditors |
| Journal Proper | Everything that doesn't fit into the above |
The Cash Book is so important it gets its own tutorial — see Tutorial 10. Let's cover the rest here.
Purchase Book
Records all credit purchases of goods only. Cash purchases go in the cash book; credit purchase of furniture or computers (not for resale) goes in the journal proper. Source document: the invoice received from the supplier.
Format
| Date | Invoice No. | Name of Supplier | L.F. | Amount (₹) |
|---|---|---|---|---|
| 2017 Aug 4 | 3250 | Neema Electronics | — | 1,82,000 |
| Aug 10 | 3260 | Pawan Electronics | — | 31,050 |
| Aug 18 | 4256 | Northern Electronics | — | 3,06,250 |
| Aug 26 | 3294 | Neema Electronics | — | 54,000 |
| Aug 29 | 3281 | Pawan Electronics | — | 38,700 |
| Total transferred to Purchases A/c | 6,12,000 | |||
Posting
- Each individual supplier's account is credited daily for the amount of that invoice
- The monthly total is posted to the debit of Purchases Account in the ledger
Purchase Returns Book (Returns Outward)
Records goods returned to suppliers (defective, wrong items, excess quantity, etc.). For each return, a debit note is prepared and sent to the supplier; the supplier in turn issues a credit note.
Format
| Date | Debit Note No. | Name of Supplier | L.F. | Amount (₹) |
|---|---|---|---|---|
| — | — | Neema Electronics | — | 13,200 |
Posting
- The supplier's account is debited for each return (reducing what we owe them)
- The total is credited to Purchase Returns Account
Sales Book
Records all credit sales of merchandise. Cash sales go in the cash book. Source document: the sales invoice we issue to the customer.
Format
| Date | Invoice No. | Name of Customer | L.F. | Amount (₹) |
|---|---|---|---|---|
| 2017 Apr 6 | 178 | Raman Traders | — | 4,850 |
| Apr 9 | 180 | Nutan Enterprises | — | 21,000 |
| Apr 28 | 209 | Raman Traders | — | 85,000 |
| Total transferred to Sales A/c | 1,10,850 | |||
Posting
- Each customer's account is debited (they owe us)
- The total is credited to Sales Account
Sales Returns Book (Returns Inward)
Records goods returned by customers. The seller issues a credit note for each return.
Posting
- The customer's account is credited (reduces what they owe us)
- The total is debited to Sales Returns Account
Journal Proper
The journal proper records anything that doesn't fit into any other subsidiary book:
- Opening entry — recording opening balances at the start of a year
- Adjustment entries — outstanding expenses, prepaid expenses, depreciation, commission received in advance
- Rectification entries — to correct errors found later
- Transfer entries — closing nominal accounts to the Trading or P&L Account
- Purchase or sale of items on credit other than goods — buying a computer on credit, for example
- Goods withdrawn for personal use
- Goods distributed as samples
- Endorsement and dishonour of bills
- Loss of goods by fire, theft or spoilage
You don't physically maintain separate subsidiary books — iAccounting maintains them automatically based on the type of voucher you enter. A Sales Voucher feeds the Sales Book, a Purchase Voucher feeds the Purchase Book, and so on. You can view any subsidiary book on demand.
See voucher types →Continue Learning
Build on this lesson with these related tutorials: