Cash Purchase Journal Entry – Accounts

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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