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Purchase Book : Meaning, Format, and Example

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What is a Purchase Book?

Purchase Book is prepared by the firms to record the credit purchase of goods. Purchase of goods for cash and purchase of other things other than goods are not recorded in the purchase book. Cash purchases are recorded in Cash Book and other things are recorded in Journals and respective Ledgers. The invoice received from suppliers with the net amount after trade discount helps to record the credit purchases in the Purchase Book.

Purchase Book is prepared because it becomes easier, and we can have a periodic total of credit purchase of goods. It helps to know and check the price charged for goods. It also reduces to burden to pass journal entries for each credit purchase of goods. The Purchase Book is totalled at the end of the specified period (week, month, or year), and it is posted to Purchase Account.

Format of Purchase Book:

 

The purchase book has ten columns:

1. Date: The date of the transaction is written in the first column.

2. Particulars: The name of the supplier, the name of the articles, and the quantities purchased are written in the particulars column.

3. Invoice Number: The invoice number of the goods purchased is written.

4. Ledger Folio(L.F.): At the time of posting the purchase in the ledger, the page number of the leger is written.

5. Details: The amount in respect of each article is written. If any trade discount is availed, it is deducted from the gross amount.

6. Purchase: The net amount of purchases, i.e., Purchases less trade discount is shown in this column.

7. Input Central GST (CGST): CGST is charged on those goods, which are purchased within the state, i.e., the seller and the buyer belong to the same state. A separate column is made to make entries for CGST. It is calculated on the net purchase value, i.e., Purchases less trade discount, and further shown on the debit side of the ledger account of Input CGST.

8. Input State GST (SGST): SGST is also charged on those goods which are purchased within the state, i.e., the seller and the buyer belong to the same state. A separate column is made to make entries for SGST. It is calculated on the net purchase value, i.e., Purchases less trade discount, and further shown on the debit side of the ledger account of Input SGST.

9. Input Integrated GST (IGST): IGST is charged on those goods which are purchased from outside of the state, i.e., the seller and the buyer does not belong to the same state. A separate column is made to make entries of the tax collected under IGST.  It is also calculated on the net purchases value, i.e., Purchases less trade discount, and further shown on the debit side of the ledger account of Input IGST.

10: Total: Total amount of every transaction is shown in this column.

Illustration: 

Prepare the Purchase Book for July 2022 of Sunita General Stores, Ranchi assuming CGST @ 5% and SGST @ 5%. The following information is given: 

 

Solution:


Last Updated : 28 Jul, 2023
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