How to prepare a purchases day book

Step by step

1. List each credit purchase. Enter the date, supplier name and invoice total for every purchase of goods on credit.
2. Total the day book. Add the invoice totals to get total credit purchases for the period.
3. Post each supplier individually. Credit each supplier's account in the purchases ledger with their invoice total.
4. Post the total to purchases. Debit the total to the purchases account in the nominal ledger.
5. Confirm it balances. The single debit equals the sum of the individual credits.

Worked example

Invoices of RM600 and RM400 give a total of RM1,000 debited to purchases.

Understanding the method

The purchases day book mirrors the sales day book. When a business buys goods on credit, it gets an invoice from the supplier. The invoices are listed in date order, and one total is posted to the purchases account at the end of the period.

A separate record shows how much is owed to each supplier. The book itself has no running balance and is not part of the ledger.

Only credit purchases of goods for resale belong here. Cash purchases are recorded in the cash book.

Items the business will keep and use, such as a computer or office shelving, are non-current assets. Treating them as purchases would understate assets and overstate cost of sales.

As with sales, the figure entered is the invoice total after trade discount but before settlement discount. If a question gives a list price of RM1,200 less 30% trade discount, enter RM840.

Sometimes figures are already given net of trade discount. Then do not deduct again.

Here is an example. On the 4th, an invoice from Meng Wholesale for RM720. On the 8th, an invoice from Sri Timber for goods with a list price of RM1,000 less 15% trade discount, so RM850.

On the 12th, an invoice from Kavitha Traders for RM430. A cash purchase of RM90 on the 10th goes in the cash book. A photocopier bought on credit for RM1,500 on the 14th is a non-current asset, not goods for resale.

The purchases day book shows RM720, RM850 and RM430, a total of RM2,000. Debit RM2,000 to the purchases account, because purchases are a cost, which is a debit.

Credit each supplier's account with its own invoice total, because the business now owes that amount. The photocopier is recorded through the journal as an asset, with a payable.

The credits to suppliers (720 + 850 + 430) must equal the single debit of RM2,000. If not, an amount was added or copied wrongly.

Common mistakes: posting the total to the credit of the purchases account, and deducting settlement discount at invoice stage. Others are entering the list price instead of the price after trade discount, and recording an asset purchase here, which inflates cost of sales and reduces profit.

If you are unsure which purchases belong in the day book, we can help. One of our teachers can go through a mixed list with you and show how to sort credit purchases from assets and cash buys. Book a trial class

Related skills

• How to prepare a sales day book
• How to prepare a purchases ledger control account
• How to post from books of prime entry to the ledger

The methods here are standard accounting practice, with original figures. For your exam board's exact requirements, see exam boards and Sources.