Page 56 - DMGT403_ACCOUNTING_FOR_MANAGERS

Unit 3: Sub-division of Journals

3.8 Bills Payable Book Notes

Where either purchases are made for credit or loans are taken, then Bills are issued which are
termed as Bills Payable. The book in which these bills are recorded is termed as Bills Payable
Book. All such Bills are totalled after a lapse of a certain period and are posted in the accounts of
the creditors to whom such bills are issued. Following is the form of Bills Payable Book:
Bills Payable Book
Date To Term Drawer Acceptor Endorser Due Where L.F. Amount Remarks
Whom (s) Date payable ( )
Payable

Task Prepare a Cash Book with Bank column only:
2009
July 1 Balance at bank 10,000
July 4 Received a cheque from Pankaj 5,000
July 7 Issued a cheque to Rakesh 6,000
July 10 Received dividend by bank draft 2,000
July 15 Mukesh was paid by issuing a cheque 1,500
July 20 Deposited into bank 7,000
July 24 Interest collected by bank 200
July 28 Dividend collected by bank 500
July 31 Bank charges debited 800

Hint: Total of Cash Book 24,700, Closing Balance 16,400.
3.9 Summary

The regular/frequent occurrence of transactions are recorded only in the separate books
which are known as subsidiary book of accounts or subsidiary journals, instead of being
recorded in the regular journal.
Subsidiary books are classified on the basis of transactions viz Cash transactions and
Noncash-transactions.

3.10 Keywords

Bill of exchange: A bill of exchange is an unconditional order signed by the maker which directs
the recipient to pay a fixed sum of money to a third party at a future date.

Journal: The primary book in which the transactions are recorded first time.
Ledger: It is the classification of accounts in which various accounts are maintained.
Subsidiary book: It is a book maintained for routine transactions of the enterprise.
Trial Balance: Trial balance is a list in which all the balances of the accounts of Ledger are
showed to test the arithmetical accuracy of the posting in ledger.

LOVELY PROFESSIONAL UNIVERSITY 51