Choose Business Stage


Search


Reset


Tags

Show All Tags

 

Inspirational Quotes

The Purchase Ledger

Wed, 13 November 2002

Purchase ledgers are used to record all suppliers' invoices; to show those which are still unpaid; and to allow VAT to be accounted for.
Purchase ledgers are used to record all suppliers' invoices; to show those which are still unpaid; and to allow VAT to be accounted for. Look at the purchase ledger example below. Whenever you make a purchase and receive a purchase, record the information as follows:
 
• Date: date the purchase invoice was received (this is important for VAT purposes);
• Details: name of the supplier;
• Ref: whilst it is not essential to use reference numbers, it makes good sense. Number the purchase invoices as they are received and record the number in the ledger so that you can easily retrieve the bill if a query arises later;
• Gross: record here the total amount you owe;
• VAT: if you are registered for VAT show the total VAT in this column;
• Columns F-M are used for recording different types of purchase. This will help in the preparation of management accounts and, particularly, in exercising effective financial control. Enter the net amount in the appropriate column(s). If you are not registered for VAT, then use the gross amount and ignore the VAT column completely. The figure in the gross column (D) should be equal to the total of the other columns;
• Date paid: when you pay a supplier, record the date in this column. It is then very easy at the end of each month to see which purchase invoices are still outstanding.
• Use a new page for each month. File the purchase invoices in reference number order.
• If you are placing orders for goods to be received at some date in the future, then you should give an order number. If you are likely to have a lot of goods on order at any time, then set up an order book so that you can quickly see the level of your commitment. Allocate unique numbers and use order forms.
 
Example
During May, eight orders previously placed were delivered and invoiced. These purchases totalled £5,800.00 plus £840.00 VAT. Note how the purchases have been analysed into materials, marketing, premises, telephone, capital and other. You don’t have to use these headings - use whatever is helpful for your business. By the end of May, none of the purchase invoices had been paid. But by the end of June, all except one had been paid.
 
Purchase Ledger
 
A
B
C
D
E
F
G
H
M
N
1
Date
Details
Ref
Gross
VAT
Mater -ials
Market -ing
Prem -ises
Capital
Date paid
2
1/5
Oliver Ltd
900
235
35
200
 
 
 
1/6
3
2/5
Smith Ltd
901
470
70
 
400
 
 
10/6
4
8/5
Oliver Ltd
902
352.50
52.50
300
 
 
 
1/6
5
20/5
Hudspeth Plant
903
2350
350
 
 
 
2000
14/6
6
21/5
Sampson Ltd
904
352.50
52.50
300
 
 
 
29/6
7
23/5
Tom & Co
905
705
105
600
 
 
 
1/6
8
27/5
Grant
906
1175
175
1000
 
 
 
 
9
28/5
R.Clark plc
907
1000
 
 
 
1000
 
2/6
10
 
 
 
 
 
 
 
 
 
 
11
 
 
 
 
 
 
 
 
 
 
26
 
 
 
 
 
 
 
 
 
 
27
 
 
 
 
 
 
 
 
 
 
28
 
Total
 
6640
840
2400
400
1000
2000
 
29
 
Paid
 
5465
 
 
 
 
 
 
30
 
Creditors outstanding
 
1175
 
 
 
 
 
 

Related Posts