Subsidiary books: purchases, sales and returns

When a business has hundreds of credit purchases and sales, one journal is not enough. The journal is split into special books, one for each kind of transaction.

The idea

In a large business most transactions are of a few repeating kinds. Recording each as a full journal entry wastes time. So the journal is divided into subsidiary books (also called special journals or day books). Each book records one kind of transaction in a simple list, and only the monthly total is posted to the main account.

Book	What it records	Source document
Cash book	All receipts and payments of cash and through the bank	Receipts, cheque counterfoils, pay-in slips
Purchases book	Credit purchases of goods only	Invoices received from suppliers
Sales book	Credit sales of goods only	Copies of invoices issued
Purchases return book	Goods returned to suppliers	Debit notes
Sales return book	Goods returned by customers	Credit notes
Journal proper	Everything that fits none of the above	Journal vouchers

What does not go in the purchases and sales books

Cash purchases and cash sales go in the cash book.
Purchase or sale of assets, such as furniture bought on credit, goes in the journal proper. The purchases book is for goods meant for resale only.

Purchases book: solved example

Royal Electricals, September 2026. Sep 3: bought from Bright Lamps 100 LED bulbs at ₹90 each, less 10% trade discount. Sep 12: bought from Volt Supplies 20 ceiling fans at ₹1,400 each. Sep 21: bought from Bright Lamps 50 tube lights at ₹220 each, less 10% trade discount.

Date	Supplier and details	Amount (₹)
Sep 3	Bright Lamps: 100 LED bulbs @ ₹90 = 9,000; less trade discount 10% = 900	8,100
Sep 12	Volt Supplies: 20 ceiling fans @ ₹1,400	28,000
Sep 21	Bright Lamps: 50 tube lights @ ₹220 = 11,000; less trade discount 10% = 1,100	9,900
Sep 30	Purchases A/c Dr.	46,000

Posting

Each supplier's account is credited with his own amount: Bright Lamps ₹8,100 and ₹9,900; Volt Supplies ₹28,000.
The total, ₹46,000, is debited to Purchases A/c at the end of the month.

Debits ₹46,000 and credits ₹18,000 + ₹28,000 = ₹46,000: double entry is complete.

Sales book: solved example

Sep 6: sold to City Hardware 10 ceiling fans at ₹1,800 each. Sep 15: sold to Anand Stores 60 LED bulbs at ₹120 each. Sep 27: sold to City Hardware 20 tube lights at ₹300 each.

Date	Customer and details	Amount (₹)
Sep 6	City Hardware: 10 ceiling fans @ ₹1,800	18,000
Sep 15	Anand Stores: 60 LED bulbs @ ₹120	7,200
Sep 27	City Hardware: 20 tube lights @ ₹300	6,000
Sep 30	Sales A/c Cr.	31,200

Posting: each customer's account is debited (City Hardware ₹24,000 in all, Anand Stores ₹7,200) and the total ₹31,200 is credited to Sales A/c.

Returns books, debit notes and credit notes

Purchases return (return outwards). On Sep 14 Royal Electricals returns 2 defective fans to Volt Supplies, ₹2,800. It sends a debit note, telling the supplier that his account has been debited. In the purchases return book: Volt Supplies ₹2,800. Posting: debit Volt Supplies ₹2,800; credit Purchases Return A/c with the month's total.

Sales return (return inwards). On Sep 18 Anand Stores returns 5 bulbs, ₹600. Royal Electricals sends a credit note, telling the customer that his account has been credited. In the sales return book: Anand Stores ₹600. Posting: credit Anand Stores ₹600; debit Sales Return A/c with the month's total.

Dr. Volt Supplies Cr.
Date	Particulars	₹	Date	Particulars	₹
Sep 14	To Purchases Return A/c	2,800	Sep 12	By Purchases A/c	28,000
	To Balance c/d	25,200
		28,000			28,000

Dr. Anand Stores Cr.
Date	Particulars	₹	Date	Particulars	₹
Sep 15	To Sales A/c	7,200	Sep 18	By Sales Return A/c	600
				By Balance c/d	6,600
		7,200			7,200

Royal Electricals owes Volt Supplies ₹25,200, and Anand Stores owes Royal Electricals ₹6,600.

Journal proper

The journal proper keeps only the entries that have no special book:

Opening entry at the start of the year.
Credit purchase or sale of assets.
Adjustment entries: outstanding and prepaid items, depreciation, provisions.
Rectification of errors.
Transfer entries between accounts.
Closing entries that transfer expenses and incomes to the Trading and Profit and Loss Account.
Other items such as bad debts written off and goods withdrawn by the owner.

Advantages of subsidiary books

Work can be divided among several clerks, each keeping one book.
Posting is quicker: one total instead of hundreds of entries.
Information on any kind of transaction is found in one place.
Errors are easier to trace, since each book can be checked on its own.

With tax, each of these books gets extra columns for GST. See GST journal entries.

Questions students ask

Are cash purchases recorded in the purchases book?

No. The purchases book records only credit purchases of goods. Cash purchases are recorded in the cash book.

What is the difference between a debit note and a credit note?

A debit note is sent by the buyer when returning goods: it says the supplier's account has been debited. A credit note is sent by the seller when goods are returned to him: it says the customer's account has been credited.

Where is furniture bought on credit recorded?

In the journal proper. The purchases book is only for goods bought for resale.