Books of prime entry

THE BOOKS in which we record transactions first are known as the books of original entry. There is a separate book for each different type of transaction. There are seven journals, also known as the books of prime entry, and this is the first tier in the accounting system.

They do not form a part of the double-entry system; however, they record the important details of a transaction.

A bill or a receipt is documentary evidence of whether a transaction is for cash or credit.

Source documents are used to make entries in the books of prime entry. The movement of stock is recorded in the following: Purchases Sales Returns inwards Returns outwards The movement of cash is recorded in the: Cash book Petty cash

Other transactions are recorded in the general ledger. Below is a table with that gives information to explain: Get samples of the different source documents; get familiar with the layout and use of each.

The heading and entries of the sales, purchases, return inwards and return outwards journal:

WORKED EXAMPLE 1

You are required to make entries in the stock movement books of Jolly Kelly: What is to be done when preparing the:

PURCHASES JOURNAL

1. The four accounts entered are to be credited with purchases in the purchases ledger.

2. Debit purchases account in the general ledger with the total of purchases journal.

SALES JOURNAL

1. Three accounts debited in the sales ledger.

2. Sales a/c will be credited with the total of sales journal in the general ledger.

RETURNS OUTWARDS JOURNAL

1. The first two accounts are to be credited in the purchases ledger.

2. Debit returns outwards a/c will with the amount in the general ledger.

RETURNS INWARDS JOURNAL

1. The first account will be credited in the sales ledger.

2. The second entry represents the credit note sent to the customer.

3. The return inwards a/c will be debited with the amount in the general ledger.

WORKED EXAMPLE 1

Solution: Jolly Kelly purchases journal

SALES JOURNAL RETURNS INWARDS JOURNAL RETURNS OUTWARDS JOURNAL BRAIN TEASER

Recommended answer to brain teaser:

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