16. Returns of merchandise sales.—The few cases in which a customer returns merchandise to be credited to his account can be handled directly thru the journal by charging an account headed "returns of merchan dise," and crediting the customer. If the number of these returns is excessive, a separate book can be used for recording them. This book should be known as Merchandise Returned Book, and should be oper ated on the same principle as the sales book, except that each entry should represent a debit to returns of merchandise and a credit to the customer. The debits. should be posted in total and the credits individually.
17. Purchase book.—It should be noticed that the cash and sales transactions have been entirely with drawn from the main journal and recorded in separate books. What has been said regarding the use of these books may be applied also, in a general way, to the use of a book devoted entirely to recording purchases. If there are many purchases, a purchase book should be used. The method of making entries in this book would be the same as in the sales book and which has. been explained; the purchases for the month would be charged, in total, to the merchandise purchased ac- count. The offsetting credit to the firms from which these purchases were made would be posted individ ually to each firm's account.
The total of the charges to purchases should equal the total of the individual credits to the respective creditors. Cash purchases would be recorded as a charge to purchases in the purchase book, while the offsetting credit would appear in the cash book as a credit to cash. The debit in the one book offsets the credit in the other, and the individual posting of each record need not be made. This is an application of the principle already outlined under the discussion of cash sales.
Specialization in books relieves the journal of most of its burden. Indeed, altho a book bearing that
name continues in use, its function is confined to the recording of a few miscellaneous transactions, like the receiving or giving of notes on account, and to the ad justment and transferring of items from one account to another. This, of course, involves the correction of errors and similar processes. In order that this book may be distinguished from the specialized forms of journals, it is usually known as the main, or general, journal.
18. Method of operation.—The details of the sys tem of gathering accounting information for the book keeper's use will vary with the individual conditions and requirements of each business. But when this information reaches the bookkeeper, he always classi fies it according to the divisions in his books; he then makes the entries in each book separately. It is cus tomary to enter the sales and cash books daily. At the end of every day the balance as shown by the cash book should be compared with the balance of cash on hand, plus the amount in the banks, as shown by the check books. The balance of cash as shown by the cash book, is, of course, the difference between the debit and the credit side of that book.
The purchase book will ordinarily be entered about once each week; the journal may be written up even less frequently. It should be remembered, however, that if merchandise returns are recorded in the main journal, they must be entered and posted to the cus tomer's accounts before the status of any individual account can be determined.
The detailed posting to these accounts is generally made at regular intervals. The total debits and cred its to "cash," total credits to "sales," total charge to and total charges to "return of merchan dise" need not be posted until the end of the month, when one posting for the entire month's transactions can be made.