Subsidiary Books

Subsidiary Books are extension of Principal Books (of Journal & Ledger) Book.

When volume of transactions increase, recording of all transactions in Primary Books (Journal) and posting into one Ledger Book become inconvenient.

Subsidiary Books save time, labour, space and avoid Primary Books becoming voluminous.

In organisations with large number of transactions, to have prompt and accurate information, the Primary Books (like Journal & Ledger books) are sub divided into subsidiary books (known as special Journals or Ledgers). These books are sometimes also called Special Purpose Subsidiary books.

Subsidiary Journal Books

When Subsidiary Journal Books are maintained, the Primary Journal Book is generally called as ‘Journal Proper’. Following subsidiary books are most commonly used.

Purchase Day Book: To record credit purchase. Sales Day Book: To record credit sales. Purchase Return Book: Goods returned to supplier. Sales Return Book: Goods returned by customer.
Bills Receivable Book: Details of Bills Receivables. Bills Payable Book: Details of Bills Payables.
Other Subsidiary Journal Books : Special Journal Books as per requirement of the organisation, containing routine transactions, depending on the nature of business (like Travelling Bills, Conveyance Expenses etc).
Petty Cash Book, which is a subsidiary Cash Book, is often maintained by many organisations.

Subsidiary Ledger Books

Like Subsidiary Journal Books, mostly personal Ledger Accounts, if they are too many, are maintained in separate Subsidiary Leger Books.

Debtors Ledger : Personal Ledger Books of Customers.
Creditors Ledger : Personal Ledger Books of Suppliers.
Other Ledger Books : Personal Ledger Books of Employees, Loan Given, Loan Taken etc

When Subsidiary Ledger Books are maintained, the Primary Ledger Book is generally called as ‘General Ledger’.

Control Ledger Accounts

When Subsidiary Ledger Books are also maintained, the respective Control Ledger account is normally created in the General Ledger book, representing the total of all ledger accounts (Personal Ledger accounts) of the subsidiary Ledger Accounts.

The balance of the respective control account in the General Ledger account will be equal to the sum of net balance of all the ledger accounts of the subsidiary ledger account.

For example, the balance of Debtors Control account in the General Ledger will be equal to the sum of Ledger accounts of the Customers Subsidiary Ledger Book. Similarly, Control Ledger Accounts may be created for subsidiary ledgers of Creditors, Lenders, Borrowers, Employees etc.

Advantage of Subsidiary Books

Ease of Posting : Due to sub-division Books, posting of entry becomes easy.
Information : As one type of transaction is recorded in one book, it is convenient to find related information quickly.
Division of Work : As there are multiple books, the books can be divided among several persons for entry.
Employee Efficiency: Efficiency of the employees who maintain such books can be ascertained. Employee can be easily and quickly trained.
Internal Check : It is easy to make internal check, as the responsibility of each type of work is fixed to the person concerned.
Responsibility : Each employee does his work with care as any mistake or irregularity is noticed in his books, he is held accountable.
Evidence : Related subsidiary book can be conveniently produced instead of producing the entire set of Accounts Books.

Purchase Day Book

All credit purchases for tradable goods are primarily recorded in Purchase book. Credit purchase of assets like machinery, furniture, stationery, other office use items etc. are recorded in Journal Proper or separate Subsidiary Books .

Contents of Purchase Day Book :

Date : Date column containsthe Date of entry of Purchase in Purchase Day Book. This is voucher Date.
Particulars : Particularscolumn containsthe details of Items Purchased. The value of each Item is entered in Details column. Some organisations, provide separate columns for other charges, Discount, etc.
Net Amount : Net Amountcolumn containsThe Net Amount Payable.

In manual books, normally some more info columns like Invoice Number, Challan Number , etc, may be used depending on requirements. Normally a column LF for posting of Leder Folio is also provided where the respective Leger Folio is entered on posting to the Ledger Account .

Purchase Day Book for June 2021

Date	Particulars	Details	(Rs.)	Discount	Net Amt
01.06.2021	Poddar electric Co. 10 Electric Fans @ Rs.800 5 Electric Irons @ Rs.200	8,000 1,000	9,000	900	8,100

15.06.2021	Sony Electric Co. 20 Electric Heaters @ Rs.300	6,000	6,000	300	5,700
Total for June 2021	15,000	1,200	13,800

Posting from Purchase Day Book

The total of the Purchase book is posted to the Ledger Account

Posting in Personal Leger Account : The net payable amount is posted to the credit of respective supplier ledger account, as ‘By Purchase A/c’. Sometimes, Supplier’s Personal Ledger Account is maintained in Subsidiary Ledger Book.
Posting in Ledger Account : The Net Purchase Amount after Discount is posted Debiting the Purchase Ledger Account in General Ledger Book.

However, some organisation also post the total of individual column like Gross Amount, Other charges, Trade Discount, etc. to separate Ledger Account in General Ledger, as ‘By Purchase Day Book’. The totals of columns that are added in the Invoice are debited to the respective ledger account, while the totals of columns that are deducted in the Invoice are credited to the respective ledger account,

Ledgers Posting from Purchase Book

Poddar electric Co.

Date	Particulars	L.F	Dr	Date	Particulars	L.F	Cr
				01.06.2015	By Purchase A/c		8,100
Sony Electric Co.
Date	Particulars	L.F	Dr	Date	Particulars	L.F	Cr
				01.06.2015	By Purchase A/c		5,700
Purchase Account
Date	Particulars	L.F	Dr	Date	Particulars	L.F	Cr
30.06.2015	Purchase Day Book		13,800

Note: The net amount after trade discount is posted in Purchase Ledger.

In manual Ledger Books, normally a column LF for posting of Ledger Folio is also provided where the respective Day Book (Journal) reference is entered on posting to the Ledger Account

Sales Day Book

All credit sales are primarily recorded in Sales book. Credit Sale of Assets like machinery, furniture etc. scrap and other non-traded items are recorded in Journal proper.

Contents of Sales Day Book

Date : Date column containsthe Date of Sale in Sales Day Book. This is voucher Date.
Particulars : Particularscolumn containsthe details of Items sold. The value of each Item is entered in Details column.
Other Charges : Additional columns are provided for Other charges like Freight, Packing Charges, Taxes etc. Trade Discount, if any, may be entered in Trade Discount column.
Net Amount : Net Amountcolumn containsthe Net Bill Amount receivable from the customer.

Sales Day Book

Date	Particulars	Gr. Amt.	Discount	Exc. Duty	Net Amt
01.06.21	Gupta Co. 10 Electric Fans @ Rs.1,000 2 Electric Irons @ Rs.350	10,000 700	1,070	1,070	10,700

15.06.21	NET Pvt. Ltd. 10 Electric Heaters @ Rs.400	4,000	200	400	4,200
Total	14,700	1,270	1,470	14,900

In manual Day Books, normally more Info columns for Invoice Number, Challan Number etc., may be provided as necessary. A column LF for posting to Ledger Folio is also provided where the respective Day Book (Journal) reference is entered on posting to the Ledger Account

Posting from Sales Day Book

The total of the Sales book is posted to the Ledger Account

Posting in Personal Ledger Account : The net receivable amount is posted to the debit of respective Customer ledger account, as ‘By Sales Day Book’. Sometimes, Customer’s Personal Ledger Account is maintained in Subsidiary Ledger Book.
Posting in Ledger Account : The total figures of each amount column is posted to the credit of respective Ledger Account. as ‘By Sales Day Book’. The total of deductions head, if any, is posted to the debit of the respective ledger account.

Note: Trade Discount is reduced from Sales and Net amount (Sales – Trade Discount) is posted to Sales Ledger A/c. However, some organisations may post the total Trade Discount to a separate Ledger Account.

In manual Ledger Books, normally a column LF for posting of Ledger Folio is also provided where the respective Day Book (Journal) reference is entered on posting to the Ledger Account

Purchase Return Book

The goods purchased may be returned by the purchaser for some reason (defective or not according to sample or description). Goods returned to supplier are recorded in Purchase Return Book (also known as Returns Outward Book).

The buyer returning the goods to supplier, issue a Debit Note on the supplier whom the purchased goods are retuned to. On the other hand, the supplier, receiving back the goods issue a credit note the buyer who returned the goods. The Buyer, on issuing the Debit Notes, enters the details in Purchase Return Book. So, Purchase Return Book is sometimes also called Debit Note Book

Contents of Purchase Return Book are almost similar to Purchase Book

Purchase Return Book

Date	Particulars	Amt	Disc	Amt
20.06.21	Poddar electric Co. 1Electric Fan @ Rs.800 each	800	80	720
25.06.21	SONY Electric Co. 1 Electric Heater@ Rs.285 each	285		285
		1,085	80	1,005

Posting from Purchase Return Book

The total of the Purchase Return book is posted to the Ledger Account

Posting in Personal Ledger Account : The net Amount is posted to the Debit of respective Supplier ledger account, as ‘By Purchase Return Book’.
Posting in Ledger Account : The Net Purchase Return Amount is posted to the credit of Purchase Return or (Purchase) Account. However, some organisation also post the total of individual column like Gross Amount, Other charges, Discount, etc. to separate Ledger Account in General Ledger, as ‘By Purchase Return Book’, in the same way they do in Purchase Day Book.

Sales Return Book

Goods sold on credit may be returned by the customer for some reason (defective or not according to sample or description) returned by the customer. Goods returned by Customers are recorded in Sales Return Book, also known as Returns Inward Book.

The buyer returning the goods to supplier, issue a Debit Note on the supplier whom the purchased goods are retuned to. On the other hand, the supplier, receiving back the returned goods, issue a credit note the buyer who returned the goods. The supplier, on issuing the Credit Notes, enter the details in Sales Return Book. So, Sales Return Book is sometimes also called Credit Note Book.

The contents of Sales Return Book is similar to Sales Book

Sales Return Book

Date	Particulars	Inv#.	Amount
20.06.2021	NET Pvt. Ltd. 1 Electric Heater @ Rs.418.		418

Posting from Sales Return Book

The total of the Sales Return book is posted to the Ledger Account

Posting in Personal Ledger Account : The Net Amount is posted to the credit of respective Customer ledger account, as ‘By Sales Return A/c’.
Posting in Ledger Account : The total of individual column is posted in the debit of respective general ledger account. The total of deduction column, if any, is posted to Credit of the respective ledger account.

Other Subsidiary Books

Subsidiary Journals are used for high volume regular transactions of a specific nature.

Subsidiary Books help to keep high volume regular transactions separate for ease of working, reduce posting work and distribute work among different persons.

Apart from the common subsidiary Journals like Sales & Purchase books, Sales Return & Purchase Return Day Books, petty Cash Books etc., some organisations use other subsidiary Journals for their commonly used transactions.

Consignment Outward Book: Some organisations send their goods to Agents, which is sold by them, on risk and on behalf of the Principals. The Principals keeps record of these goods in a book which is called ‘Consignment outward book.” Similarly, Agents may maintain Consignment Inwards book.
Debtors Collection Day Book: Amount received from their customers is recorded in this book. This becomes a subsidiary cash book in respect of amount received from Debtors
Creditors Payment Day Book: Amount paid to suppliers is recorded in this book. This becomes a subsidiary cash book in respect of amount paid to Creditors
Daily Cash Sales Book: Some businessmen keep a daily cash sales book in which all the cash sales of each day are recorded. At the end of day, total amounts is posted in the respective ledger account. The contents are similar to Sales Book, except that name of the customer is not recorded. Total amount received is posted into Cash A/c