Cash Purchase Journal Entry
Cash Purchase Journal Entry, is the accounting entry made in the books of accounts, to record purchase of goods by paying for it at the time when the goods are acquired .
Further, the Purchase could be of an Asset, or trading goods. The Cash Purchase Journal Entry can therefore be divided in the following categories : –
- Purchase of trading goods on cash
- Purchase of an Asset for cash
Each of these are discussed as under : –
Cash Purchase Journal Entry – Goods
Question 1 :
What would be the Journal Entry for Purchase of goods amounting to Rs. 10,000 in Cash ?
Explanation:
Since Purchase of goods is an expense, so, Purchases A/c would be debited, because according to the Rules of Debit and Credit, an expense A/c is debited .
Further , on Payment of Purchases of goods in Cash , results in reduction of Cash, which is an Asset. When an asset is reduced, the asset account is credited according to the Rules of Debit and Credit. . So Cash A/c would credited, as a reduction in an Asset account is credited.
Hence the entry would be : –
Purchases A/c Dr. 10,000
To Cash A/c 10,000
Cash Purchase Journal Entry – Asset
Question 2:
What would be the Journal Entry for Furniture purchased amounting to Rs. 10,000 in Cash ?
Explanation:
Since Purchase of Furniture results in an increase in the value of furniture, Furniture A/c would be debited, because according to the Rules of Debit and Credit, an increase in an asset A/c is debited .
Further , on Purchases of Furniture in Cash , there is a in reduction of Cash, which is an Asset. When an asset is reduced, the asset account is credited according to the Rules of Debit and Credit. . So Cash A/c would credited.
Hence the correct entry is:
Furniture A/c Dr. 10,000
To Cash A/c 10,000
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2 thoughts on “Cash Purchase Journal Entry – Accounts”
Journal entries
cash A/c Dr
To Party’s A/c