Question

Prepare subsidiary books from the following information [5]

2019 April
1 Purchased goods from Mr. Mayur less 30% Trade discount Rs 70,000.
2 40% of goods purchased from Mr Mayur sold to Mr. Chatur.
3 Mr. Chatur returned defective goods of Rs 3,000 (net)
4 Returned defective goods to Mayur Rs 900 (gross)
5 Ravi sold goods to us Rs 6,000 .
6 Returned goods to Mr Ravi 20%.
14 Purchased goods of Rs 50,000 from Mr. Menon .
15 Goods purchased from Mr. Menon sold to Mr Rajan for Rs 80,000.
16 Mr. Rajan returned goods of Rs 8,000/- which were defective .
18 Rajan’s defective goods returned to Mr. Menon.
21 Cash sales Rs 21,000.
27 Cash Purchases Rs 25,000

Answer 1

Subsidiary books document detailed transactions, such as purchases, sales, and returns. These records detail the exchange of goods and services between the business and its suppliers and customers, without considering VAT. The documentation of these transactions enables the business to track its financial activities accurately for the designated period.

Step-by-step explanation:

The process of recording transactions in subsidiary books involves several steps, including purchasing and returning goods, cash sales, and cash purchases.

1. Purchase from Mr. Mayur: On April 1st, goods were purchased for Rs 70,000 with a 30% trade discount. The purchase book records the net amount: Rs 70,000 - (30% of Rs 70,000) = Rs 49,000.
2. Sale to Mr. Chatur: On April 2nd, 40% of the goods purchased from Mr. Mayur were sold to Mr. Chatur. The sales book records this transaction at the same net amount: Sale = Rs 49,000 x 40% = Rs 19,600.
3. Return from Mr. Chatur: Mr. Chatur returned defective goods worth Rs 3,000 on April 3rd, which are recorded in the Sales Returns Book.
4. Return to Mr. Mayur: On April 4th, defective goods were returned to Mr. Mayur worth Rs 900 (gross), which should be recorded in the Purchase Returns Book at the net amount after discount: Rs 900 - (30% of Rs 900) = Rs 630.
5. Purchase from Ravi: Goods worth Rs 6,000 were purchased from Ravi on April 5th, recorded in the Purchase Book.
6. Return to Ravi: On April 6th, a 20% return of goods to Mr. Ravi takes place, recorded in the Purchase Returns Book: 20% of Rs 6,000 = Rs 1,200.
7. Purchase from Mr. Menon and Subsequent Transactions: Transactions from April 14th to 18th involve purchasing and selling goods to Mr. Rajan and then handling returns, all recorded in their respective books.
8. Cash Sales and Purchases: Cash sales on April 21st and cash purchases on April 27th are recorded in the Cash Book.

The net result of these transactions will reflect the business's purchasing, selling, and return activities within the relevant accounting period, and transactions are recorded without VAT as it has not been mentioned.