Purchases Book

When a business purchases goods on credit, it is recorded in the purchases book. This book is used to record all credit purchases made by the business.

In this scenario, the business has purchased goods worth Rs. 5,000 on credit basis. This transaction will be recorded in the purchases book.

The purchases book is a subsidiary book, which means it is a book of original entry. This means that transactions are first recorded in the purchases book before being posted to the general ledger.

The purchases book is usually divided into columns for the date of the transaction, the name of the supplier, the invoice number, the amount, and the GST paid.

When the invoice is received from the supplier, it should be checked for accuracy and then entered into the purchases book. The transaction is then posted to the relevant accounts in the general ledger.

Other options:

- Bills Receivable book: This book is used to record all bills receivable, which are promissory notes or other forms of written promises to pay. This is not relevant to this scenario as the business has not received any bills receivable.
- Journal Proper (General journal): The general journal is used to record transactions that do not fit into any other subsidiary book. This is not relevant to this scenario as the purchase of goods on credit would be recorded in the purchases book.
- Purchases Return: This is used to record returns of goods that the business has purchased. This is not relevant to this scenario as the business has not returned any goods.

Credit purchases of goods are recorded in purchases book.
As the purchase from E was on credit basis it is recorded in purchases book.