Question

Journal entry for paid freight on Machine Purchased

Answer 1

hey ur answer is
Machinery a/c. Dr.
to cash/bank a/c

As the freight can be paid either by cash or bank

Answer 2

Freight expense is not a revenue expenditure, it is a capital expenditure.. so it is not recorded separately but capitalised to the asset....


so these expenses are added to the cost of machinery..(take 500000 as the cost of machinery ; mode of payment is cash/Cheque).. Let freight be 5000

so 500000 + 5000 = 505000..is recorded in the books of accounting ..

The transaction affects two accounts... Machinery a/c and Cash a/c (they are real accounts ; all assets and Liabilities come under Real account;cash and machinery are assets).

The Golden rule of accounting for Real account-

Debit What comes in, credit what goes out

Here machinery is comingin,so it should be debited..Cash is going out,so it should be credited...

The Journal Entry will be ..

Machinery a/c Dr 505000

To Cash/bank a/c. 505000

(Being machinery bought for cash/bank)