COMMERCE 1
SOURCE DOCUMENTS AND BOOKS OF ORIGINAL
Source documents
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 include 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.
COMMMERCE 1 BOOK KEEPING NOTES PREPARED BY MR. ANTONY AMBIA Page 1
,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
(i) Sales journals
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
COMMMERCE 1 BOOK KEEPING NOTES PREPARED BY MR. ANTONY AMBIA Page 2
, (Post the rest to their individual debtors account)
(ii) 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
“ 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
COMMMERCE 1 BOOK KEEPING NOTES PREPARED BY MR. ANTONY AMBIA Page 3
SOURCE DOCUMENTS AND BOOKS OF ORIGINAL
Source documents
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 include 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.
COMMMERCE 1 BOOK KEEPING NOTES PREPARED BY MR. ANTONY AMBIA Page 1
,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
(i) Sales journals
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
COMMMERCE 1 BOOK KEEPING NOTES PREPARED BY MR. ANTONY AMBIA Page 2
, (Post the rest to their individual debtors account)
(ii) 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
“ 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
COMMMERCE 1 BOOK KEEPING NOTES PREPARED BY MR. ANTONY AMBIA Page 3
