The purchase day book is one of the most important books of prime entry in accounting. In this guide, you’ll learn more about this record, as well as how it fits in when it comes to double-entry bookkeeping and journals.
What is a Purchase Day Book?
The purchase day book is a list of credit purchases made by a business. It is filled out using copies of purchase invoices received (source records), summarising essential information about purchases made including:
- Invoice date
- Supplier name
- Sales tax or VAT
- Value of products or services sold
The exact information recorded will vary from business to business, depending on their needs. It should be noted that the purchase day book is only used to record the day-to-day purchase of a business – credit notes will be recorded separately in the purchase return book.
Example Purchase Day Book
Here is a sample purchase day book for Eddie LTD, where purchases are analysed by product type:
What is a Purchase Day Book Used For?
The purchase day book helps businesses keep track of what they have bought so they can see how much their costs are and who they owe money to. It is periodically totalled up and a journal entry is made to enter purchases into the general ledger, from which the trial balance is prepared and, finally, the financial accounts.
In summary, the following entries will be made using the information contained in the purchase day book:
- Updates to the individual purchase ledgers to record how much individual suppliers are owed;
- Weekly or monthly journal to record purchases in the general ledger;
Purchase Day Book v. Purchase Ledgers
The purchase day book is normally updated on a daily basis so all invoices captured are noted in a list. Then either daily or weekly, whichever is appropriate to the business, individual purchase ledgers are updated.
Individual purchase ledgers are a record kept for each supplier logging invoices raised and payments made. That way it is clear how much money each supplier is owed (trade creditors).