SOURCE DOCUMENTS AND BOOKS OF ORIGINAL ENTRY
These are documents containing the information that makes basis of making entries in the
books of accounts. They act as evidence that the transaction actually took place. They
includes
Cash sale receipt: - a document that shows that cash as been received or paid out
of the business either in form of cash or cheque. It is a source document that is
mainly used in making records in the cash journals cash book, cash accounts or
bank accounts. If the receipt is received, it means payments has been made and
therefore will be credited in the above accounts, or taken to cash
disbursement/payment journals, while when issued, it means cash/cheque has been
received and therefore will be debited in the above accounts or taken to cash
receipt journals
Invoice: - a document issued when the transaction was done on credit to demand
for their payment. If the invoice is an incoming invoice/invoice received, then it
implies that the purchases were made on credit, and if it is an outgoing/invoice
issued then it implies that sales were made on credit.
The incoming invoice will be used to record the information in the purchases
journals/diary, while an outgoing invoice will be used to record information in sales
journals/diaries
Credit note: - a document issued when goods are returned to the business by the
customer or the business return goods to the supplier and to correct any
overcharge that may have taken place. If it is received, then it means part of the
purchases has been returned and therefore the information will be used to record
information in the purchases return journals, while if issued then it means the part
of sales has been returned by the customers and therefore used to record the
information in the sales return journals/diaries
Debit note: - a document used to correct an undercharge that may have taken
place to inform the debtor to pay more. It therefore acts as an additional invoice
Payment voucher: - a document used where it is not possible to get a receipt for
the cash/cheque that has been received or issued. The person being paid must sign
on it to make it authentic. It is therefore used to record information just as receipts
Books of original entries/Journals/Diaries/day’s books/Subsidiary books
These are books where the transactions are listed when they first occur, with their entries
being made on a daily basis before they are posted to their respective ledger accounts.
The information in the source documents are used to make entries in these books. The
books of original entries include:
Sales journals
Sales return journals/Return inwards journals
Purchases journals/creditors journals/bought journals
Purchases return journals/return outwards journal
Cash receipt journals
Cash payment/cash disbursement journals
Three column cash book
The petty cash book
Analysis cash book
General journals/journal proper
Sales journals
Mburugu Ken 1
,This is used to record credit sales of goods before they can be recorded in their various
ledgers. The information obtained in the outgoing invoice/invoice issued is used to record
the information in this journal as the source document
The overall total in the sales journal is therefore posted in the sales account in the general
ledger on credit side and debtors account in the sales ledger as a debit entry
Sales journal
Date Particulars/details Invoice no Ledger folio amount
Example:
The following information relates to Tirop traders for the month of June 2010
June 1: Sold goods to wafula on credit of ksh 200, invoice no 0114
2: Sold to the following debtors on credit; Wanjiru ksh 400, Musyoka ksh 300,
Wafula ksh 300
5: sold goods on credit to Wanjiru of ksh 300
10: Sold goods to the following on credit Kanini ksh 100, Wafula ksh 500,
Wanjiru ksh 600
12: Sold goods on credit to musyoka of ksh 350
Required:
Prepare the relevant day book for the above transactions; hence post the
various amounts to their respective individual accounts
Sales journal
Date Particulars/details Invoice no Ledger folio amount
June 2010:
1 Wafula 0114 SL 200
2 Wanjiru SL 400
2 Musyoka SL 300
2 Wafula SL 300
5 Wanjiru SL 300
10 Wanjiru SL 600
10 Wafula SL 500
10 Kanini SL 100
12 Musyoka SL 350
15 Totals posted to the sales
account (Cr) GL 3050
(Post the rest to their individual debtors account)
Sales Return Journals/Return inwards journals
This is for recording the goods that the customers/debtors have returned to the business.
It uses the information in the credit note issued as a source document to prepare it. The
information is therefore recorded to the return inwards account in the general ledger,
while the individual’s entries are reflected (credited) also in their respective debtors
account for double entry to be completed. It takes the following format
Sales return journal
Date Particulars/details Credit note no Ledger folio amount
For example;
Record the following transaction for the 2007 in their relevant diaries, hence post them to
their respective ledger accounts;
May 1: goods that had been sold to M Okondo of shs 2600 on credit was returned to
the business
Mburugu Ken 2
, “2: G. Otuya returned good worth shs 1320 that was sold to him on credit to
the business
“ 8: the following returned goods that had been sent to them on credit to the
business H Wati shs 3500, Muya shs 4700 M Okondo shs 2900
“ 12: G Otuya returned goods worth shs 5400 that were sold on credit to the
business
“ 30: Goods worth sh 8900 that had been sold on credit to G Otuya were returned
to the business
Sales Return journal
Date Particulars/details Credit note Ledger folio amount
no
May 2007:
1 M Okondo S.L 2600
2 G Otuya S.L 1320
8 H Wati S.L 3500
8 Muya S.L 4700
8 M Okondo S.L 2900
12 G Otuya S.L 5400
30 G Otuya S.L 8900
Totals posted to Return
Inwards a/c (Dr) GL 29320
(Post the entries to the individual ledger a/c’s (Cr))
Purchases Journal
This is used to record the credit purchase of goods. The totals are then debited in the
purchases account in the general ledger, while the individual’s creditors accounts are
credited. It used the invoices received/incoming invoices as it source document. It takes
the following format;
Purchases journal
Date Particulars/details Invoice no Ledger folio amount
For example
The following information relates to Mikwa Traders for the month of April 2011. Record
them in their relevant day’s book, hence post the entries to their relevant ledger accounts.
April 2011;
“ 2. Bought goods worth shs 25 000 on credit from Juma, Invoice no 3502
3. Bought goods worth shs 16 500 from kamau on credit, invoice no 2607
6. Bought goods worth shs 12 700 from Juma on credit, invoice no 3509
8. Purchased goods of shs 25 200 from juma, invoice no 3605; shs 17 500 from
Kamau, invoice no 3700; shs 45 000 from Wamae wholesalers, invoice no 3750
15. Purchased goods of shs 9 200 from Wamae wholesalers on credit, invoice no
3762
18. Bought goods of shs 17 000 from Kamau on credit, invoice no 3802
24. Purchased goods of shs 36 000 from Juma suppliers on credit, Invoice no 3812
Purchases Day book
Date Particulars/details Invoice no Ledger folio amount
April 2011:
2 Juma 3502 PL 25 000
3 Kamau 2607 PL 16 500
6 Juma 3509 PL 12 700
8 Juma 3605 PL 25 200
Mburugu Ken 3
, 8 Kamau 3700 PL 17 500
8 Wamae 3750 PL 45 000
15 Wamae 3762 PL 9 200
18 Kamau 3802 PL 17 000
24 Juma 3812 PL 36 000
Totals posted to the
Purchase account (Dr) GL 204100
(Post the individual entries to their relevant accounts in the ledger (crediting))
Purchases Return Journals/Return outwards Journals
This is used to record goods that have been returned to the creditors by the business,
reducing the value of the goods that had been purchased. It uses the credit note received
as the source documents, with the totals being in the purchases return account while the
individual creditor’s accounts are debited in their respective ledger accounts. It takes the
following format
Purchases return journal
Date Particulars/details Credit note no Ledger folio amount
For example;
Record the following transaction in the purchases return day book for Njiru’s traders for
the month of June 2010, hence post the information into their relevant ledger accounts.
June 2010;
“ 3. Returned goods worth shs 400 that had been bought from Nairobi stores, credit
note no 56
“ 8. Return goods of shs 1 200 to Matayos store, Credit no 148
“19. Had some of their purchases returned to the following; Njoka enterprises shs
700, credit note no 205, Nairobi Stores shs 600, credit note no 58, Matayos
store shs 1 000 credit note no 191
“26. Returned goods worth shs 1 800 to Njoka enterprise credit note no 210
“30. Return goods worth shs 1 020 to Matayos store, credit note no 200
Cash receipt Diaries
This is used to record all the cash and cheques that have been received in the business.
They may be many that posting directly in the cash book may be tedious and are
therefore first recorded here. It totals are posted to the cash and bank accounts in the
general ledger (Dr), while the individual accounts are credited in their respective accounts
in the ledger. It uses the cash receipt issued and bank slips received as the source
documents. It takes the following format;
Cash receipt journal
Date Particulars/details Receipt no Ledger folio Disc cash bank
allowed
Cash payment Journals
This is used to record cash and cheques that have been issued to the creditors/out of the
business. Its totals are credited (Cr) in the cash and bank account and the individual
accounts are debited (Dr) in their respective accounts It uses the cash receipt received
and bank slips issued as the source documents. It takes the following format;
Cash Payment journal
Mburugu Ken 4
These are documents containing the information that makes basis of making entries in the
books of accounts. They act as evidence that the transaction actually took place. They
includes
Cash sale receipt: - a document that shows that cash as been received or paid out
of the business either in form of cash or cheque. It is a source document that is
mainly used in making records in the cash journals cash book, cash accounts or
bank accounts. If the receipt is received, it means payments has been made and
therefore will be credited in the above accounts, or taken to cash
disbursement/payment journals, while when issued, it means cash/cheque has been
received and therefore will be debited in the above accounts or taken to cash
receipt journals
Invoice: - a document issued when the transaction was done on credit to demand
for their payment. If the invoice is an incoming invoice/invoice received, then it
implies that the purchases were made on credit, and if it is an outgoing/invoice
issued then it implies that sales were made on credit.
The incoming invoice will be used to record the information in the purchases
journals/diary, while an outgoing invoice will be used to record information in sales
journals/diaries
Credit note: - a document issued when goods are returned to the business by the
customer or the business return goods to the supplier and to correct any
overcharge that may have taken place. If it is received, then it means part of the
purchases has been returned and therefore the information will be used to record
information in the purchases return journals, while if issued then it means the part
of sales has been returned by the customers and therefore used to record the
information in the sales return journals/diaries
Debit note: - a document used to correct an undercharge that may have taken
place to inform the debtor to pay more. It therefore acts as an additional invoice
Payment voucher: - a document used where it is not possible to get a receipt for
the cash/cheque that has been received or issued. The person being paid must sign
on it to make it authentic. It is therefore used to record information just as receipts
Books of original entries/Journals/Diaries/day’s books/Subsidiary books
These are books where the transactions are listed when they first occur, with their entries
being made on a daily basis before they are posted to their respective ledger accounts.
The information in the source documents are used to make entries in these books. The
books of original entries include:
Sales journals
Sales return journals/Return inwards journals
Purchases journals/creditors journals/bought journals
Purchases return journals/return outwards journal
Cash receipt journals
Cash payment/cash disbursement journals
Three column cash book
The petty cash book
Analysis cash book
General journals/journal proper
Sales journals
Mburugu Ken 1
,This is used to record credit sales of goods before they can be recorded in their various
ledgers. The information obtained in the outgoing invoice/invoice issued is used to record
the information in this journal as the source document
The overall total in the sales journal is therefore posted in the sales account in the general
ledger on credit side and debtors account in the sales ledger as a debit entry
Sales journal
Date Particulars/details Invoice no Ledger folio amount
Example:
The following information relates to Tirop traders for the month of June 2010
June 1: Sold goods to wafula on credit of ksh 200, invoice no 0114
2: Sold to the following debtors on credit; Wanjiru ksh 400, Musyoka ksh 300,
Wafula ksh 300
5: sold goods on credit to Wanjiru of ksh 300
10: Sold goods to the following on credit Kanini ksh 100, Wafula ksh 500,
Wanjiru ksh 600
12: Sold goods on credit to musyoka of ksh 350
Required:
Prepare the relevant day book for the above transactions; hence post the
various amounts to their respective individual accounts
Sales journal
Date Particulars/details Invoice no Ledger folio amount
June 2010:
1 Wafula 0114 SL 200
2 Wanjiru SL 400
2 Musyoka SL 300
2 Wafula SL 300
5 Wanjiru SL 300
10 Wanjiru SL 600
10 Wafula SL 500
10 Kanini SL 100
12 Musyoka SL 350
15 Totals posted to the sales
account (Cr) GL 3050
(Post the rest to their individual debtors account)
Sales Return Journals/Return inwards journals
This is for recording the goods that the customers/debtors have returned to the business.
It uses the information in the credit note issued as a source document to prepare it. The
information is therefore recorded to the return inwards account in the general ledger,
while the individual’s entries are reflected (credited) also in their respective debtors
account for double entry to be completed. It takes the following format
Sales return journal
Date Particulars/details Credit note no Ledger folio amount
For example;
Record the following transaction for the 2007 in their relevant diaries, hence post them to
their respective ledger accounts;
May 1: goods that had been sold to M Okondo of shs 2600 on credit was returned to
the business
Mburugu Ken 2
, “2: G. Otuya returned good worth shs 1320 that was sold to him on credit to
the business
“ 8: the following returned goods that had been sent to them on credit to the
business H Wati shs 3500, Muya shs 4700 M Okondo shs 2900
“ 12: G Otuya returned goods worth shs 5400 that were sold on credit to the
business
“ 30: Goods worth sh 8900 that had been sold on credit to G Otuya were returned
to the business
Sales Return journal
Date Particulars/details Credit note Ledger folio amount
no
May 2007:
1 M Okondo S.L 2600
2 G Otuya S.L 1320
8 H Wati S.L 3500
8 Muya S.L 4700
8 M Okondo S.L 2900
12 G Otuya S.L 5400
30 G Otuya S.L 8900
Totals posted to Return
Inwards a/c (Dr) GL 29320
(Post the entries to the individual ledger a/c’s (Cr))
Purchases Journal
This is used to record the credit purchase of goods. The totals are then debited in the
purchases account in the general ledger, while the individual’s creditors accounts are
credited. It used the invoices received/incoming invoices as it source document. It takes
the following format;
Purchases journal
Date Particulars/details Invoice no Ledger folio amount
For example
The following information relates to Mikwa Traders for the month of April 2011. Record
them in their relevant day’s book, hence post the entries to their relevant ledger accounts.
April 2011;
“ 2. Bought goods worth shs 25 000 on credit from Juma, Invoice no 3502
3. Bought goods worth shs 16 500 from kamau on credit, invoice no 2607
6. Bought goods worth shs 12 700 from Juma on credit, invoice no 3509
8. Purchased goods of shs 25 200 from juma, invoice no 3605; shs 17 500 from
Kamau, invoice no 3700; shs 45 000 from Wamae wholesalers, invoice no 3750
15. Purchased goods of shs 9 200 from Wamae wholesalers on credit, invoice no
3762
18. Bought goods of shs 17 000 from Kamau on credit, invoice no 3802
24. Purchased goods of shs 36 000 from Juma suppliers on credit, Invoice no 3812
Purchases Day book
Date Particulars/details Invoice no Ledger folio amount
April 2011:
2 Juma 3502 PL 25 000
3 Kamau 2607 PL 16 500
6 Juma 3509 PL 12 700
8 Juma 3605 PL 25 200
Mburugu Ken 3
, 8 Kamau 3700 PL 17 500
8 Wamae 3750 PL 45 000
15 Wamae 3762 PL 9 200
18 Kamau 3802 PL 17 000
24 Juma 3812 PL 36 000
Totals posted to the
Purchase account (Dr) GL 204100
(Post the individual entries to their relevant accounts in the ledger (crediting))
Purchases Return Journals/Return outwards Journals
This is used to record goods that have been returned to the creditors by the business,
reducing the value of the goods that had been purchased. It uses the credit note received
as the source documents, with the totals being in the purchases return account while the
individual creditor’s accounts are debited in their respective ledger accounts. It takes the
following format
Purchases return journal
Date Particulars/details Credit note no Ledger folio amount
For example;
Record the following transaction in the purchases return day book for Njiru’s traders for
the month of June 2010, hence post the information into their relevant ledger accounts.
June 2010;
“ 3. Returned goods worth shs 400 that had been bought from Nairobi stores, credit
note no 56
“ 8. Return goods of shs 1 200 to Matayos store, Credit no 148
“19. Had some of their purchases returned to the following; Njoka enterprises shs
700, credit note no 205, Nairobi Stores shs 600, credit note no 58, Matayos
store shs 1 000 credit note no 191
“26. Returned goods worth shs 1 800 to Njoka enterprise credit note no 210
“30. Return goods worth shs 1 020 to Matayos store, credit note no 200
Cash receipt Diaries
This is used to record all the cash and cheques that have been received in the business.
They may be many that posting directly in the cash book may be tedious and are
therefore first recorded here. It totals are posted to the cash and bank accounts in the
general ledger (Dr), while the individual accounts are credited in their respective accounts
in the ledger. It uses the cash receipt issued and bank slips received as the source
documents. It takes the following format;
Cash receipt journal
Date Particulars/details Receipt no Ledger folio Disc cash bank
allowed
Cash payment Journals
This is used to record cash and cheques that have been issued to the creditors/out of the
business. Its totals are credited (Cr) in the cash and bank account and the individual
accounts are debited (Dr) in their respective accounts It uses the cash receipt received
and bank slips issued as the source documents. It takes the following format;
Cash Payment journal
Mburugu Ken 4
