Credit purchase of goods dealt in or of materials and stores used in the factory are recorded on the basis of the invoice in the Purchase Book or the Purchase Journal . It means cash purchases and purchases of goods other than goods dealt in are not recorded in the Purchase Journal .
Featured of Purchase Book
1. Credit purchase of goods traded in or material used for production are recorded in the Purchase Book . Credit purchase of goods or material not dealt in , such as office furniture or computers for office use are not recorded in the purchase book . They are Journalised .
2. Cash purchases are not recorded in the Purchase Book since they are recorded in the cash book .
3. The entries in the Purchase Book are made on the basis of invoices received from the suppliers with the net amount after Trade Discount .
The ruling of a Purchase Book is as follows :
The purchase book has six columns:
1. Date : In the first column , the transaction date is written .
2. Particulars : In this column , the name of the suppliers , name of the articles and quantities purchased are written .
3 Invoice No : Invoice number of the goods purchased is written .
4. L.F.: When the Purchases Book is posted to the Ledger , the page number of the Ledger is written .
5. Details : The amount in respect of each article is written in this column . If the seller has allowed a Trade Discount it is also deducted in this column itself . It is shown as follows :
Quantity × Price per Article. ...........
Less: Trade Discount. ............
Add : Expenses .............
6. The net amount of the invoice is recorded in the extreme right hand column . The total in this column will show the ' total credit purchase ' made in a period .
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