Chapter 8 Recording Purchases

Jul 17, 2026

Uploaded by Violet

Chapter 8 focuses on recording purchases in accounting ledgers. It explains how to post totals from the purchase day book into the nominal (general) ledger, including debit entries to relevant expense accounts and the sales tax account, and a credit entry to the payables control account. The chapter also details the role of memorandum accounts in tracking amounts owed to each supplier, clarifying how this supports records without relying on memorandum accounts as part of double entry. It further covers posting purchase returns from the purchase returns day book to ledger accounts and describes principles for computerized integrated purchase ledgers.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages10

Reading Time25 min

AccessFree to download

Chapter 8 RECORDING PURCHASES When expenditure is incurred, a record should be entered in the accounting system. Purchases on credit are recorded in the nominal (general) ledger and a payables ledger. This chapter explains the procedures for recording purchases in the ledgers. It also considers supplier statements and monitoring of payables in the aged payables analysis. This chapter covers the syllabus area for recording purchases. | CONTENTS
1 Posting to the nominal (general) ledger
2 Computerised ledgers
3 Statements
4 Aged payables analysis
5 Communication with suppliers | | --- | | LEARNING OUTCOMES
At the end of this chapter, you should be able to:
• maintain a manual nominal (general) and purchase or payables ledger to record purchases
• describe a computerised payables ledger
• prepare, reconcile and understand the purpose of supplier statements
• understand the purpose of and prepare an aged payables analysis
• communicate efficiently and effectively with suppliers. | 1 POSTING TO THE NOMINAL (GENERAL) LEDGER 1.1 POSTING FROM THE PURCHASE DAY BOOK TO THE NOMINAL (GENERAL) LEDGER Each column of figures in the purchase day book represents an account in the nominal (general) ledger. There are columns for: • total creditors (the total column) • sales tax • each expense account in the nominal (general) ledger, and possibly some asset accounts too. The total values of the entries in each column are the total amounts invoiced by suppliers, the sales tax on those invoices, and the total amount of expenditure for each item of expense. These total figures in each column are posted to the nominal (general) ledger as follows. • Debit: Each expense account with the total for the appropriate column in the purchase day book. For example, debit the Purchases account in the nominal (general) ledger with the total value of the Purchases column, and debit the Motor vehicle expenses account with the total of the Motor vehicle expenses column. These totals will be net of sales tax. • Debit: The sales tax account in the nominal (general) ledger with the total of the sales tax column. • Credit: payables control account with the total including sales tax. You will recognise that this is similar to the approach seen earlier for sales. Memorandum accounts As well as needing to know the total amount owed to credit suppliers at any one time, shown in the control account, it is also necessary to know exactly how much each individual credit supplier is owed. This is done by the use of memorandum accounts (see Chapter 5) . In the case of suppliers, these are maintained in the payables ledger. Don’t forget, unless told otherwise in the exam, memorandum accounts are not part of the double entry system for a business. They are an essential part of any business’record keeping but using them as part of the double entry system, rather than using the payables control account, is a cumbersome option. Control

Jul 17, 2026

Uploaded by Violet