Purchases day book double entry

Purchases day book is meant to record credit purchases transactions. Its main purpose is to post goods purchase on credit transactions. Items of assets such as machineries purchased on credit do not pass through this journal. One advantage of this book is that it allows for traceability of purchase transactions.

1. What's purchases day book

The purchases day book is a book used to record credit purchases. Another name for it are: purchases journal and bought day book. The source document for this book of prime entry is the purchases invoices. When the business makes a requisition for goods, the purchase order is used. However, this is not used to record the day book till an invoice is received.

2. How does the Purchases Journal work?

When a purchase invoice is received, it is recorded to the purchases journal. The date, name of the supplier, reference number on the invoice, folio reference to the ledger and the amount in the source document. This posting is done anytime a purchase is made and an invoice is received by the buying company.

The Purchase day book does not record cash transactions. Therefore, when a purchase is incurred and cash is paid immediately, an invoice may not be issued by the vendor. However, when the supplier issues an invoice it is usually accompanied with a receipt to show proof of cash payment. This goes into the cash book. 

Note that there is a difference between a cash purchase and cash payment for previous purchases. The latter occurs after a credit purchase was incurred previously. Items bought that are not part of the normal business operations such as the purchase of a motor car for a director are not purchases. Therefore, they are not recorded in the purchase day book. However, they passed through the general journal. 

3. Double entry for purchases day book

When the bookkeeper receives the purchase invoice, he or she records it into the purchases journal. At the end of the month, the total amount in the book is transferred to the debit side of the purchases account in the general ledger. However, on a daily basis and in a manual accounting system, the invoices received are used to credit the individual creditor’s account in the account payable ledger.

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