The Purchases Ledger is where we calculate how much is owed by the business to each of its credit suppliers. Information from the Purchases Day Book (“PDB”), the Purchases Returns Day Book (“PRDB”) and the Discounts Received Day Book (“DRDB”) will be posted to the relevant supplier accounts in the Purchases Ledger.
These day books record transactions affecting the amount of money that the business owes to its suppliers; i.e.
- The PDB records information taken from purchases invoices received from credit suppliers. The gross amount on each invoice represents an increase in the amount owed by the business to its suppliers
- The PRDB and DRDB record information taken from credit notes received from credit suppliers. The gross amount on each credit note represents a decrease in the amount owed by the business to its suppliers
Information to be posted into the supplier accounts of the Purchases Ledger
When posting from the PDB, PRDB and DRDB to the Purchases Ledger we just post information from the Gross (or Total) columns of these day books (note that information from the net and VAT columns will not be posted to the Purchases Ledger). In addition, we post the gross amounts from the individual invoices and credit notes to the supplier accounts in the Purchases Ledger – we do not post the period totals.
Illustration of the information to be posted to the Purchases Ledger
Posting lists & entries in the supplier accounts of the Purchases Ledger
a) From the Purchases Day Book (“PDB”) to the Purchases Ledger
When we post information from the PDB to the General Ledger we posted the gross total of all the purchases invoices recorded in the period to the credit side of the Purchases Ledger Control Account. When posting the from the PDB to the Purchases Ledger the gross amount of each invoice will also be recorded on the credit side but this time they will be posted to the suppliers’ accounts who have invoiced the business. There will be no corresponding credit entries made in the Purchases Ledger.
The postings list for the above example would therefore be as follows:
The above postings list will then be recorded in the supplier accounts as shown below. Note that we will record the invoice dates and the invoice numbers next to the gross values recorded in the supplier accounts. This way anyone looking at a supplier account can trace each entry back to the original financial documents (something that would be useful if there is a dispute with the supplier about the amounts owed).
b) From the PRDB to the Purchases Ledger
When posting the from the PRDB to the Purchases Ledger the gross amount of each credit note will be recorded on the debit side of the supplier account. There will be no corresponding debit entries made in the Purchases Ledger.
The posting list for our example will be as follows:
The above will then be posted into the supplier accounts as shown below. Note that we will record the credit note dates and the credit note reference numbers next to the gross values recorded in the supplier accounts (the postings from the PRDB are shown in blue).
c) From the DRDB to the Purchases Ledger
The entries from the DRDB are posted in the same way as those from the PRDB. The gross amounts will be recorded on the debit side of the supplier accounts in the Purchases Ledger.
The posting list for our example will be as follows:
The above will then be posted into the supplier accounts as shown below. Note that we will record the credit note dates and the credit note reference, or prompt payment reference, next to the gross values recorded in the customer accounts (the posting from the DRDB is shown in blue).
Printout
